Organic growth

Organic business growth is related to the growth of natural systems and organisms, societies and economies, as a dynamic organizational process, that for business expansion is marked by increased output, customer base expansion, or new product development, as opposed to mergers and acquisitions, which is inorganic growth.

For businesses organic growth typically excludes the impact of foreign exchange. "Core growth" is the term that is used to refer to growth that includes foreign exchange, but excludes divestitures and acquisitions.

Organic business growth is growth that comes from a company's existing businesses, as opposed to growth that comes from buying new businesses. It may be negative. Through Growth planning, businesses are able to achieve organic growth by selecting the best strategies available to them.[1] For example, by examining Ansoff's matrix, businesses can select from market penetration, market development, product development and diversification to grow their revenue organically.

Organic business growth does include growth over a period that results from investment in businesses the company owned at the beginning of the period. What it excludes is the boost to growth from acquisitions, and the decline from sales and closures of whole businesses.

When a company does not disclose organic growth numbers, it is usually possible to estimate them by estimating the numbers for acquisitions made in the period being looked at and in the previous year. It is useful to break down organic sales growth into that coming from market growth and that coming from gains in market share: this makes it easier to see how sustainable growth is.

Relating to organic input in an organisation, it can also relate to the act of closing down cost centers through established organic methods instead of waiting for a Finance list.[2]

The mechanisms and rate of growth of firms experiencing organic growth was extensively studied by Edith Penrose in her 1958 book The Theory of the Growth of the Firm.[3][4]

An early reference to "organic growth" appeared in Inazo Nitobe's 1899 book The Soul of Japan.

Organic Growth is evolving to a new concept within the social media marketing of the 21st century. Social networks also do organic growth in terms of followers and social presence.

See also

References
  1. Locket, Andy; Wiklund, Johan; Davidsson, Per; Sourafel, Girma (31 January 2009). "Organic and Acquisitive Growth". Journal of Management Studies. 2 (1): 1–52. doi:10.1111/joms.2008.46.issue-1.
  2. "Organic Growth".
  3. "The Four Pillars of Organic Growth | How Hard Could It Be? By Joel Spolsky". January 2008.
  4. http://moneyterms.co.uk/organic_growth/


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