Inorganic Growth Examples

Expanding a business is key to increasing revenues and market penetration. There are two ways a company can grow, organic and inorganic growth. Organic growth occurs when a company increases sales and gains new customers utilizing the existing business (Davis -

Growing a company by international acquisition, 2008). Organic growth could happen through increased marketing efforts or promotions. For instance, many businesses use online services, such as Groupon or RetailMeNot, to send targeted to promotions to customers in specific areas to drive new or repeat customers into their business. Inorganic growth happens when businesses combine, either through merger or takeover (Davis, 2008). A recent example of inorganic growth would be the drugstore

Davis also had a past track record of success with a similar business with their company Sunlight, and Berendsen was already an established company that was doing well. The acquisition was also a good financial fit as it reduced operating costs and saved on fixed costs (Davis, 2008).

The acquisition of Berendsen by Davis was an example of horizontal growth, or horizontal integration. Horizontal growth occurs when “two firms at the same stage of production join” (Davis, 2008). For this to happen, both businesses should be operating in the same business arena (Davis, 2008). For Davis, this horizontal growth happened by pairing their existing textile maintenance company, Sunlight, with the newly acquired Berendsen, a textile service company (Davis, 2008). This gives benefits to the overall business by providing a larger customer base and enabling economies of scale and sharing sharing costs, thus making the business more profitable (Davis, 2008). For European Union (EU) markets, horizontal growth is made more simple by having a shared main language (English), shared currency (Euro), cultural similarities, and legal similarities (international standards) (Davis, 2008). All of these

After the acquisition, which would be considered inorganic growth, the continued success of Davis could be attributed to organic growth. One of the biggest positives in organic growth is sharing best practices. When companies operate in similar business models, they can improve profitability by learning what is most efficient from each other. In many companies, this improves profits by significantly reducing expenses, whether that be through best practices in hiring, ordering, productivity, or in actually sharing expenses of manpower or supplies. The

European Union has aspects that support organic growth. The EU is growing very quickly and in order to keep up and turn profits, it is important for the new growth to be more on the organic side, rather than the inorganic side. As more people are moving to the European Union, more services are needed and these customers will want to receive the same products and services that they receive elsewhere in the EU. This is best accomplished through organic growth, rather than a new company taking over and creating a process, product, or service from scratch. Not