Organic growth

Organic growth

In finance, organic growth is the process of businesses expansion due to increasing overall customer base, increased output per customer or representative, new sales, or any combination of the above, as opposed to mergers and acquisitions that are examples of inorganic growth. Typically, the organic growth rate also excludes the impact of foreign exchange. Growth including foreign exchange, but excluding divestitures and acquisitions is often referred to as core growth.

Organic growth is growth that comes from a company's existing businesses, as opposed to growth that comes from buying new businesses. It may be negative.

Organic growth figures are adjusted for the effects of acquisitions and disposals of businesses. Organic growth does include growth over a period that results from investment in businesses the company owned at the beginning of the period. What it excludes is the boost to growth from acquisitions, and the decline from sales and closures of whole businesses.

When a company does not disclose organic growth numbers, it is usually possible to estimate them by estimating the numbers for acquisitions made in the period being looked at and in the previous year. It is useful to break down organic sales growth into that coming from market growth and that coming from gains in market share: this makes it easier to see how sustainable growth is.

Relating to organic input in an organisation, it can also relate to the act of closing down cost centers through established organic methods instead of waiting for a Finance list.[1]

The mechanisms and rate of growth of firms experiencing organic growth was extensively studied by Edith Penrose in her 1958 book The Theory of the Growth of the Firm.[2][3]

An early reference to 'Organic Growth' appeared in Inazo Nitobe's book The Soul of Japan written in 1899.

See also

References

  1. ^ http://www.investopedia.com/terms/o/organicgrowth.asp
  2. ^ http://www.inc.com/magazine/20080101/how-hard-could-it-be-the-four-pillars-of-organic-growth.html
  3. ^ http://moneyterms.co.uk/organic_growth/

External links


Wikimedia Foundation. 2010.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • organic growth — Refers to growth achieved by internal investments of the firm. This could be the day to day business of the firm or a division of the firm starting a new business from scratch. This is distinguished from growth by acquisition or merger which… …   Financial and business terms

  • Organic Growth — The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated… …   Investment dictionary

  • organic growth — See internal growth …   Big dictionary of business and management

  • organic growth — /ɔ:ˌgænɪk grəυθ/ noun same as internal growth …   Dictionary of banking and finance

  • organic growth — noun The business expansion through increasing output and sales as opposed to mergers, acquisitions and takeovers …   Wiktionary

  • Organic (model) — Organic describes forms, methods and patterns found in living systems such as the organisation of cells, to populations, communities, and ecosystems. Typically organic models stress the interdependence of the component parts, as well as their… …   Wikipedia

  • organic — or‧gan‧ic [ɔː gænɪk ǁ ɔːr ] adjective 1. FARMING relating to methods of growing food without using artificial chemicals: • They claim that organic farming is better for the environment. • the expanding market for organic produce 2 …   Financial and business terms

  • Organic — may refer to: Of or relating to an organism, a living entity Of or relating to an organ Contents 1 Chemistry 2 Computing …   Wikipedia

  • Organic volume — Organic volume, similar to organic growth[1], is a term used in business to describe the volume of a product produced due to a specific business process and not due to external circumstances such as acquisition from a separate source. For example …   Wikipedia

  • organic — or|gan|ic [o:ˈgænık US o:r ] adj ▬▬▬▬▬▬▬ 1¦(farming)¦ 2¦(development)¦ 3¦(living things)¦ 4¦(part of something)¦ 5¦(body organs)¦ ▬▬▬▬▬▬▬ 1.) ¦(FARMING)¦ relating to farming or gardening methods of growing food without using artificial chemicals …   Dictionary of contemporary English

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”