Organic Growth Essay Example | Topics and Well Written Essays - 2750 words

Organic Growth - Essay Example Now before discussing the advantages and disadvantages of organic growth over cross border acquisitions for multinational companies, one should first understand what is organic growth and what is a cross-border acquisition. Organic growth talks about using internal sources of a company for expanding and earning profits. In other words organic growth talks about the expansion of a firm's operations from its own internally generated resources, without resorting to borrowing or acquisition of some other firms. Organic growth represents the real growth of the company. Organic growth represents how well the company has applied its internal resources to increase profits (Reuters, 2009). Increasing output and enhancing sales are some of the methods in which the growth rate of a company can be enhanced. Organic growth sometimes is also referred to as internal growth. Here the company uses funds from one year to expand in the following year. Since organic growth is a slower way of expansion and growth, and many companies wants to grow at an accelerated rate they go in for the inorganic growth. Again a firm can grow inorganically by the means of mergers and acquisitions. ... Organic growth sometimes is also referred to as internal growth. Here the company uses funds from one year to expand in the following year. Since organic growth is a slower way of expansion and growth, and many companies wants to grow at an accelerated rate they go in for the inorganic growth. Again a firm can grow inorganically by the means of mergers and acquisitions. Inorganic growth is often seen as a faster way to grow in the business and acquire new markets. Inorganic growth is seen as a major and significant event for the faster growth. Inorganic growth strategies are regarded as important tools to reach into new markets, expand customer base, cut competition, consolidate and grow in size quickly. Cross border acquisitions and mergers Due to globalization, companies have started the ways and means to gain competitive advantage over their competitors. Also the world has seen increased deregulation, privatization and corporate restructuring; globalization has led to cross-border acquisitions and merger activities. Today they are seen as the main mechanism in which a company can expand in foreign markets. The cross border acquisitions and mergers cuts down competition, helps the companies to expand their customer base and grow in size quickly. But there are many barriers to cross-border acquisitions and mergers. Some of them have been discussed below: Legal barriers: cross border acquisitions and mergers are very complex transactions which may involve a number of legal entities. The company may suffer due to lack of information which may also result in deadlock. There may be cases where even after the acquisitions the acquiring company may not get proportionate powers in the