Inorganic growth is the rate of growth of
business, sales expansion etc. by increasing output and business reach by acquiring new businesses by way of
mergers,
acquisitions and take-overs. This kind of growth also takes place due to government directives, leading to enhancement of business in some identified priority sector/area. The inorganic growth rate also factors in the impact of foreign exchange movements or performance of other economies.
As opposed to the
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 devel ...
, this kind of growth is affected to a great extent by exogenous factors. It is also a faster way for companies to grow compared with organic growth (where the main focus is productivity enhancement and cost reduction).
After a merger, the business benefits of
mergers and acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
(M&A) to fuel inorganic growth prove to be difficult to realise. Several risks are introduced by this method of inorganic growth – a clash in company cultures and the risk of losing customers are some of the main issues. In contrast, with organic growth, a business has better control over its growth by planning and deploying more easily accessible internal resources
This term is usually related with financial sectors showing expanding business and profits.
Lackluster organic growth kicks up broker M&A activity in May
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References
External links
M&A: Growth for the sake of growth?M&A drives Pharma Inc. Prof R D Joshi
Mergers and acquisitions
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