organic growth


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Organic growth

Refers to growth achieved by internal investments of the firm. This could be the day to day business of the firm or a division of the firm starting a new business from scratch. This is distinguished from growth by acquisition or merger which involves an outside firm.

Organic Growth

The growth rate of a company coming from its operations. Organic growth comes about when a company has solid sales, a large client base, and/or low overhead. Organic growth can lead to an expansion of operation without resorting to issuing securities or borrowing from a bank. Specifically excluded from organic growth is growth resulting from a merger or acquisition. Organic growth is considered a leading indicator of a company's underlying performance.

organic growth

or

internal growth

a mode of business growth which is self generated (that is, expansion from within) rather then being achieved externally through MERGERS and TAKEOVERS. Organic growth typically involves a firm in improving its market share by developing new products and generally outperforming competitors (see HORIZONTAL INTEGRATION), and through market development (that is, finding new markets for existing products). Organic growth may also involve firms in expanding vertically into supply sources and market outlets (see VERTICAL INTEGRATION), as well as DIVERSIFICATION into new product areas.

The advantages of organic growth include the ability to capitalize on the firm's existing core skills and knowledge, to use up spare production capacity and to match available resources to the firm's expansion rate over time. Internal growth may be the only alternative where no suitable acquisition exists or where the product is in the early phase of the PRODUCT LIFE CYCLE. The disadvantages of organic growth are that in relying too extensively on internally generated resources, the firm may fail to develop acceptable products to sustain its position in existing markets, while existing skills and know-how may be too limited to support a more broadly based expansion programme.

For this reason, firms often rely on a combination of internal and external growth modes to internationalize their operations and undertake product/ market diversifications.

See EXTERNAL GROWTH, BUSINESS STRATEGY, PRODUCT-MARKET MATRIX, NEW-PRODUCT DEVELOPMENT.

organic growth (internal growth)

a mode of business growth that is self-generated (that is, expansion from within) rather than achieved externally through MERGERS and TAKEOVERS. Organic growth typically involves a firm in improving its market share by developing new products and generally outperforming competitors (see HORIZONTAL INTEGRATION) and through market development (that is, finding new markets for existing products). Organic growth may also involve firms in expanding vertically into supply sources and market outlets (see VERTICAL INTEGRATION) as well as DIVERSIFICATION into new product areas. The advantages of organic growth include the ability to capitalize on the firm's existing core skills and knowledge, use up spare production capacity and more closely match available resources to the firm's expansion rate over time. Internal growth may be the only alternative where no suitable acquisition exists or where the product is in the early phase of the PRODUCT LIFE CYCLE. The disadvantages of organic growth are that in relying too extensively on internally generated resources, the firm may fail to develop acceptable products to sustain its position in existing markets, while existing skills and know-how may be too limited to support a broader-based expansion programme.

For this reason, firms often rely on a combination of internal and external growth modes to internationalize their operations and undertake product/market diversifications. See EXTERNAL GROWTH, BUSINESS STRATEGY, PRODUCT MARKET MATRIX, NEW PRODUCT DEVELOPMENT.

References in periodicals archive ?
Brenda Vingiello said that Mondelez International (NASDAQ: MDLZ) has a great organic growth story and for that reason, she thinks that it is worth hanging onto.
The organic growth of Healthcare was driven by double-digit growth rates in the Fertility franchise as well as the antidiabetic agent Glucophage.
The German bank noted that Ultra returned to annual organic growth in 2018 for the first time since 2011 and is well positioned to benefit from increasing defence spending - particularly in the US, as political and military tensions remain high.
Disciplined execution and fast innovation contributed to improved organic growth and profitability.
As a result, the company has adjusted its expectations for full-year organic growth in the branded professional business to be approximately flat, as compared with the prior above 3.0%, under the assumption that the recent weakening of the economy does not accelerate further.
We delivered positive organic growth of four percent in the final quarter, turned around our business in Asia--Pacific and welcomed J.W.
Agencies surveyed in the 2018 Organic Growth and Profitability (OGP) survey generated organic growth of 6.1 percent in 2018 and are predicting record growth of 7 percent in 2019, says Kevin Stipe, president of the firm.
Also, there was solid growth during the quarter across all geographical regions, in particular Europe with 6% organic growth, driven by new product launches including SenSura Mio Convex and SpeediCath Flex.
Speaking from the Organic Farm Gate in the Lockyer Valley, Mr Furner said Woolworths Organic Growth Fund was a partnership with Toowoomba-based Heritage Bank to provide interest-free loans to organic enterprises for land acquisition, new produce varieties, new facilities and equipment.
PIRM revenues totaled $181 million, equivalent to 2017 as organic growth in property insights, including real estate-related and international operations, as well as contributions from insurance & spatial solutions acquisitions completed in 2017 were offset by the impacts of declining U.S.
- Strong growth rates in EMEA with organic growth of 4.8% and in Specialty Professional and Specialty Consumer with double-digit growth of 18.7% and 14.3% respectively.
IPA reported SC&H Group's 12.5 percent organic growth this past year qualified to be listed within the top 10 fastest-growing firms as number eight.