METHODS OF EXPANSION

ORGANIC AND INORGANIC GROWTH

ALL Define the two methods of growth

Most Analyse organic growth

Some

METHODSThere are two methods of growth

1. Organic or internal growth2. Inorganic or external growth

ORGANIC GROWTH Organic growth is internal expansion and tends

to be slow and steady

It can be achieved in a number of ways: Opening another branch, office or factory Offering franchises Expanding through the internet

OPENING NEW BRANCHESBenefitsLess riskyBetter than borrowing or sharesEasier to manage and control

DisadvantagesCan be slowCompetition may follow (market share down)May not have experience

FRANCHISESBenefits

Growth paid for by the franchisee Franchisees want to expand quickly Do not need supervision

Disadvantages May not keep to their legal agreement Brand image can be damaged Most profits are kept by the franchisee

INTERNETAdvantages

Reaches a higher number of customers Costs are lowered Can reach other markets

Disadvantages Not everyone has access Systems crashes and viruses can affect No customer contact face to face

QUICK QUIZ Name two types of growth Give a definition of organic growth Give an advantage of opening new

branches Give a disadvantage of selling a

franchise Give an example of a franchise Give one advantage and one

disadvantage of internet selling