ORGANIC VS INORGANIC GROWTH

Organic growth occurs as a company joins a separate, but normally connected,

line of business by improving the new line of business. Organic growth frequently
entails broadening a company's product or market base. Inorganic expansion will
produce the same result; however, the corporation reaches a different market by
acquiring another company or business unit.

ORGANIC GROWTH —- growing by expanding an existing business

Marketing current brands in new markets is one form of organic growth. A

company may want to expand its regional base in order to gain new customers, either
within its own country or in foreign markets. A company could also seek organic growth
by seeking potential customers for the existing offering. Arm & Hammer, for example,
advertised baking soda as a refrigerator deodorizer. Finally, companies can attempt to
adjust markets by raising or decreasing the price of goods in order to appeal to
consumers of various income levels.
Marketing new goods in developed markets is another way of organic growth. In
general, this approach entails marketing new goods across established distribution
networks. Corporation development can also be achieved by internal diversification.
This approach entails selling unrelated goods to new customers. Since it is the riskiest
of the organic growth strategy, it is the least seen. It necessitates the company's entry
into a new market where it is not yet known. A new product is also being developed
and introduced by the company. The prices of research and production, as well as ads,
would almost certainly be greater than if current goods were sold. In effect, since both
the product and the demand are fresh, the investment and the likelihood of failure are
much higher.

INORGANIC GROWTH—- expanding the business through an M&A

Organic growth happens as a company looks through its own activities and purchases
access to new goods or markets. Mergers are one form of organic growth that is often
used. Mergers arise as two or more businesses merge operations to create a single
company, possibly under a different name. These businesses are usually of comparable
scale. A merger will help to create management cohesion by forming a stronger
management team. In a merger, this will be accomplished by merging the executive
staff of the combined companies.
There are two fundamental in inorganic growth which are horizontal and vertical
integration. Vertical integration happens where a company conducts activities at various
levels of manufacturing. Participation in the various stages of development may be
produced within the business or by purchasing another firm. Horizontal incorporation or
diversification refers to a company entering operations at the same level of
development. Vertical integration is typically associated with current processes and is
classified as vertical and horizontal integration. Horizontal integration may be either
concentric or conglomerate in nature.

HORIZONTAL INTEGRATION

Horizontal integration happens as a company begins a new (related or unrelated)

market at the same point of manufacturing as its existing activities. For example, Avon's
decision to sell jewelry through its door-to-door sales force entailed selling new items
through established distribution networks. Avon has also pursued a method of
horizontal convergence by marketing its goods by mail order and retail stores . Avon is
currently in the retail stage of the manufacturing chain in both cases.

VERTICAL INTEGRATION

The different stages of manufacturing are the steps that a product takes to
convert from raw materials to a final product in the hands of the consumer. A backward
vertical integration approach is used as a company diversifies closer to the suppliers of
raw materials during the manufacturing process. Avon's main market has been the sale
of cosmetics door-to-door.
Vertical integration strategies have one significant drawback. Vertically integrated
businesses put "all of their eggs in one basket." If demand for the product declines,
necessary supplies are unavailable, or a replacement product replaces the product in
the market, the organization's earnings can suffer.