Firm Growth by Internal Expansion (Essay Sample)

The firm grows by either internal expansion through integration. The push for the firm to grow is to become bigger so as to achieve its objectives such as maximizing profit, increasing sales, and increasing the market shares and attractiveness to various investors and financiers. For example, the shareholders are willing to invest more if the company or the business is able to efficiently generate more revenues which reflects in the increasing value of divided pay per year. There are four major types of growth as elaborated below.
First is organic growth which is achieved by a company through increasing the output that in return is reflected in the internal sales. This type of growth is used to evaluate if the company existing operations in the state decreasing or growing. Moreover, organic growth leads to more investment through innovation and employee training and development to enhance the organization’s intangible capital like intellectual skills, and social capital which gives the business a competitive advantage over competitors as well as new distribution channels which provides.
Secondly is internal growth which refers to the increase in the capacity and ability of an organization to effectively and efficiently utilize its internally available resources like assets, and invested capital to generate revenues. This type of firm’s growth is concerned with the development of new products, right hiring, and better marketing among others, and can be either incorporated into expansion, modernization and diversification. Internal growth is therefore measured using parameters like the efficiency ratios and can be used to gauge the productivity of the different managers. Profit is maximized when all assets generate maximum revenue for the firm.
Thirdly, the firms can also grow inorganically through acquisitions, mergers, and partnerships. The acquisition is when a business gains control over another business entity through acquiring majority votes of the stock held by investors. On the other han