MGT602 ASsignment no 2 idea solution Spring 2011

[Vuhelper]

A business grow organically means that the company is using internal funds to expand the business, rather than purchasing another business or thru other partner-sharing business. An example of organic growth will be increasing capital using own money.
Below are some advantages of organic growth:
1. Organization strategic goals can be achieved
Thru organic growth, the management team are able to guide and lead the business according and in-line with the strategic goals of the company.
2. No crashes in culture
There will be no culture clashings as the company employees are all either hired from the start of the business or being transfered to the newly setup business. the culture and norms of the business will be maintained.
3. Cheaper compared to acquisitions
very often when a company buys another business. they'll need to pay a premium, and that premium itself can sometimes wipe out the whole value of the acquisitions rather than increasing shareholder's value.
Disadvantages of organic growth are like:
1. Longer time
organic growth business needs longer time to grow as they need to start from scratch including setting up the whole business, hiring and recruiting human capital, investing in machineries, and etc.
2. Riskier
The business will be bearing the whole risk by themselves.