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 ?
Net revenues of USD126.4m were generated in the second quarter of 2019, up by 9.8% from net revenues of USD115.1m a year ago, which was attributed to an increase in net patient revenues from physical therapy operations, internal growth, new clinic development and acquisitions, as well as an increase in the revenue from its industrial injury prevention business due to internal growth and an acquisition.
Second quarter internal growth of three percent is in line with the target we outlined last November.
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While serving as senior executive vice president, chief lending officer, Dave's exceptional communication skills, paired with his abilities to analyze financial statements and anticipate customers' needs resulted in rapid internal growth within the company.
In 2018, the company expects core capital spending of about $250 million and internal growth capex of $350 million.
Initially, these plans only included internal growth. However we foresee them developing into acquisitions which would increase our external growth immediately," Rosenthal added.
This was mainly due to increased volume and internal growth in its main markets.
CEO Bart Van Malderen says the acquisition will contribute to increasing internal growth.
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31, the fund firm reported net inflows of $3.9 billion into long-term funds and separate accounts, "driven by strong flows into floating-rate income and implementation services, and represent a 6% annualized internal growth rate (net inflows into long-term assets divided by beginning of period long-term assets managed)."
Generali plans to raise EUR4bn from sale of non-core operations by 2015 to then focus on its main business and internal growth.