Internal Expansion

Internal Expansion

• Occurs when a business grows by expanding its own activities.

• Generally inexpensive and expands on existing strengths.

• Growth is slow, which helps maintain quality and training.

• Can be a slow process, which may not suit all owners.

Methods of Organic Growth

• Opening New Stores: Low risk due to similarity to existing stores but involves extra costs like rent and staffing.

• E-commerce: Selling products online broadens the market and reduces costs compared to physical stores.

  • Requires regular tech updates.

• Outsourcing: Paying another firm to perform tasks. The outsourcing firm might be able to do tasks more quickly, cheaply or to a higher standard.

  • Involves a loss of control and potential prioritization issues.

Franchising (Can be Classed as Organic Growth)

• A company (franchisor) grants other firms (franchisees) the right to sell its products in exchange for fees or a percentage of profits.

• Increases income, market share, and brand awareness for the franchisor.

• The franchisee is responsible for the risks and costs of running a new outlet.

• Poor franchisee standards can damage the franchisor's brand reputation.