Growth strategies are generally used to increase the sales and profit of a company. Use of growth strategy of a company, to expand its business is mostly depending upon company’s financial situation, competition in the market and government regulation. Growth strategies of a business could be classified into two parts i.e. organic growth strategies and inorganic growth strategies.
Organic growth strategies refer to internal growth strategies that focus on growth by the process of Product Expansion, asset replication, exploitation of technology, better customer relationship, innovation of new technology and products to fill gaps in the market place. These growth strategies are used by the company when it is new in the market with small market capitalization and less experience.
Inorganic growth strategies refer to external growth by takeovers, mergers and acquisitions. It is fast and allows immediate utilization of acquired assets. Inorganic growth strategies are regarded as important as it helps companies to enter into new markets, expand customer base, cut competition, consolidate and grow in size quickly, employ new technology with respect to products, people and processes. Thus the inorganic strategies are regarded by companies as fast track strategies for growth and unlocking of value to shareholders. These growth strategies are used by the company when its market capitalization is large and its position is strong in particular industry.