Organic growth
Encyclopedia
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.
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.
An early reference to 'Organic Growth' appeared in Inazo Nitobe
's book The Soul of Japan written in 1899.
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
, 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
Mergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
that are examples of inorganic growth
Inorganic growth
Inorganic growth is the rate of growth of business, sales expansion etc. by increasing output and business reach by acquiring new businesses by way of mergers, acquisitions and take-overs. This kind of growth also takes place due to government directives, leading to enhancement of business in some...
. 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.
The mechanisms and rate of growth of firms experiencing organic growth was extensively studied by Edith Penrose
Edith Penrose
Edith Elura Tilton Penrose was an American-born British economist whose best known work is The Theory of the Growth of the Firm, which describes the ways which firms grow and how fast they do. Writing in The Independent the economist Sir Alec Cairncross, stated that the book brought Dr...
in her 1958 book The Theory of the Growth of the Firm.
An early reference to 'Organic Growth' appeared in Inazo Nitobe
Inazo Nitobe
was a Japanese agricultural economist, author, educator, diplomat, politician, and Christian during Meiji and Taishō period Japan.-Early Life:Nitobe was born in Morioka, Mutsu Province . His father was a retainer to the local daimyō of the Nambu clan. His infant name was Inanosuke...
's book The Soul of Japan written in 1899.