GROWTH

Growth of the Company



Table of Contents

Introduction3

Discussion4

Benefits of Growth6

Limits of Growth6

Advantages and Disadvantages of Internal Growth7

Advantages7

Disadvantages7

Advantages and Disadvantages of External Growth8

Market Growth8

Increasing the Volume of Purchases with Customers8

Increase in Market Share9

Pharmaceutical Industry9

Biotech Alliances to Strengthen Pipeline11

Luxury Brands11

Banking Industry12

Conclusion12

References14

Growth of the Company

Introduction

With the increasing demand of customers, companies are facing enormous challenges to fulfill the demands of their target markets. For this purpose, they need to grow and expand their businesses within or outside their current area of operation. Further, it has been observed that there is a lasting impact of the globalization on the business or the company. All people that are related to the firm are interconnected throughout the world with the help of global integrations within companies. Therefore, companies are expanding their businesses either by adopting internal or organic development or by merging and acquiring other companies. Growth strategies can be done through internal growth or organic or external growth. Choosing either option will depend on several factors, such as, the lifecycle stage of the commercial formula, market saturation, the level of competition, whether or not to go for rapid growth, the presence or absence of potential external partners, the level of resources and capabilities of the company, and so on (Shleifer et al. 1989: 125).

Internal growth is carrying out the strategy of growth through the creation of new establishments of the same company, perfectly controlled expansion and ensuring that the entity meets all the objectives, which is the natural alternative for a commercial distribution chain. The company can also develop this strategy by creating a new commercial formula through a subsidiary with the same or new banners (Solow 1956: 67).

When the sector, in which the company is the commercial distribution, is saturated or want to enter new markets quickly, external growth may be the preferred option. The external growth is mainly based on the purchasing of other companies or acquires financial interests in the same sector.

In this essay, we will be comparing the two approaches of growth and their significance with the help of examples from various sectors. We will also be discussing various advantages and disadvantages of the two approaches to growth. In addition to that, we will also be analyzing the practical experiences of several industries and their companies that have experienced growth through internal or external approaches of growth.

Discussion

The growth of the company is dependent on various factors such as business development that is measured quantitatively, which includes measuring the increase of sales, profits, the market share of the staff and resources) and to appreciate qualitatively (increased ability to influence the firm in its market, expanding its profile, its image development and related variables). Thus, the growth of the business can be said that it reflects the ability of maintaining or expanding the position of the company in a competitive environment. There are two ways to grow the companies that are discussed below (Zook et al. 2001: 5).

Internal growth can be highlighted as determinants of the choice of a strategy of ...