Organic Growth vs Growth through Acquisition or Alliance
Organic Growth versus Growth through Acquisition or Alliance
Organic growth describes internal strategies that companies implement to enhance growth. These internal strategies include increasing business output and strengthening the position of the company in the market using a company’s resources. One of the primary advantages of this growth strategy is that companies achieve organisational efficiency. In this regard, the organisational structure is used to enhance effective policy and strategy formulation for the growth of the firm (Jones & George 2006, p. 109). This strategy also prevents any clash in philosophical values of the company by the employees. The employees of the company are hired from the start. Therefore, they are involved in ensuring that the philosophical and cultural values of the companies are upheld and are in line with the goals and objectives of the company. Companies that adopt the organic growth strategy are also cheap and easy to manage as they do not need significant premium and capital to start. Organic growth also enhances ‘customer centricity’ (Moran, Harris & Moran 2011, p. 121). Customer centricity means that the customer is a priority in the objectives of the firm. In this regard, the company becomes focused on building quality brands that serve their customers in an enhanced manner. Organic growth also gives the company an opportunity to attract new customers and build brand loyalties with existing customers (Vera & Crossan 2004).
On the other hand, organic growth strategy has several limitations including the fact that such companies are slow in growth and development. They also take time in attaining the required profit margins. In addition, companies that use the organic growth strategy usually have limited resources necessary for growth in the market. The risks associated with organic growth are also quite high especially because the risks are limited to the management of the company. Other limitations include difficulty in recruiting human resources as well as dealing with cut-throat competition from inorganic companies in the same market (Jones & George 2006, p. 119).
Growth through acquisition or alliance is also referred to as inorganic growth. It describes a strategy that involves increased operations as a result of mergers and alliances. One of the main advantages of this growth strategy is that it leads to increased market shares for the new company in the market. In this regard, it gives companies a competitive edge in the market. Inorganic growth also gives companies access to new customer bases. Companies also attain revamped management and organisational structures that enhance their economies of scale over time (Vera & Crossan 2004).
However, inorganic growth strategies are limited in terms of managing growth. Some companies may experience a high rate of growth that surpasses expectations. In addition, Moran, Harris and Moran (2011, p. 134) claim that firms may face a clash of cultures and philosophical values of merging companies. Furthermore, this growth strategy also requires high financing to enhance productive growth as Jones and George (2006, p. 128) claim.
Organic Growth: Apple Inc and Boston Beer Company
Apple Inc and Boston Beer Company are companies that have adopted the organic growth strategy. At Apple Inc, product innovation and brand development are internal strategies that are used to enhance growth. Through their innovative products such as iMac, iPhones, and iPod among others, the company has become a trail-blazer in the industry.
Boston Beer Company enhances its growth through the development of specialty beers. Specialty beers, such as Samuel Adams Lager, Barrel Room Collection, Sam Adams Light, have enabled the company to increase its growth percentages every year. The company also relies on organisational structure strategies such as mass production and limited line production to facilitate effective marketing strategies.
Strategy Work Undertaken Showing Differences And Similarities in Strategy Work Done
Senior Executive Teams
Formulation of goals and objectives of the firm;
Formulation of policies and strategies based on advice obtained from strategy consultants;
Financing resources to efficiently carry out implementation plans.
Middle and Front Line Managers
Setting departmental goals and objectives that are in line with the general goals and objectives of the company;
Link of communication between senior executive teams and employees;
Formulation of implementation plans;
Supervise employees in strategy implementation practices (Rue & Byars 2003).
Align strategic actions with the strategic priorities of the organisation;
Develop strategic communication links between the employees and the senior level management;
Enhance strategic planning actions to improve the manner in which budget planning is done;
Influence the decision making process with data analysis about the strategies and implementation policies that have been adopted by the company (Daughtry & Casselman 2009);
Identifying and evaluating new opportunities for growth of the firm at present and in the future;
Offering assistance to senior level executives in their decision-making by providing them with information about trends in the market;
Come up with strategic projects for the senior level management to enhance organisational changes for effective decision-making.
Reviewing the current strategies that have been set by the senior executive team;
Identifying problems that may arise as a result of the formulated strategies and seeking solutions to solve these problems;
Collecting data and statistics on the strategies formulated by the senior executive team to enhance the viability of these strategies;
Identifying the advantages and disadvantages of the formulated strategies based on the data and statistics that have been collected;
Advising the senior level executives on the strategy formulation process.
Strategy Jobs after University
One of the strategy jobs available immediately after leaving university is a junior analyst. As a junior analyst, I will be able to do different evaluations on the strategies to build reliable recommendations for the management. As a junior analyst, I will conduct research on different industry trends to enable the business strategy to be effective. However, I would need to further my education in strategy consultancy. I will need to take further studies in management and marketing to enable me to become more skilful in analysing business trends and patterns in the future.
Research strategist is another strategy job that may be available to me immediately after leaving university. As a research strategist, one of my primary roles will be conducting research studies on different elements of the company. Research strategists are also responsible for collecting data for the company about different strategies that they intend to formulate. Research strategists evaluate data and come up with recommendations for the management. Further education that may provide a stepping stone to achieving my ambitions includes pursuing Masters’ degree in business administration, marketing, and management. This education will enable me to become better equipped in analysing data and information for strategic purposes.
Differences between Strategic Management and Strategic Leadership
Strategic management is the unremitting process of formulating policies and enhancing implementation of actions for these policies. It also involves a systematic process of analysing decision-making processes. On the other hand, Davies (2004) states that strategic leadership describes the actions that leaders take to ensure that the vision and direction of the firm are communicated to the employees of the business. It is the act of influencing effective change within the organisation through motivating and persuading people to share the company’s vision and as such achieve the goals of the firm in the long run.
Strategic management specifies an organisation’s policies and means of implementing these policies. It also ensures that resources have been allocated efficiently in line with the implementation of these policies. However, strategic leadership focuses on providing efficient direction and vision for the company’s employees to enable them to achieve the goals of the firm (Finkelstein, Hambrick & Cannella 2009; Lynch 2010).
According to Lynch (2010) strategic management is focused on an analytical process that is dependent on a conceptual framework. It involves a planned system of governance and authority to manage change in the organisation. On the other hand, strategic leadership depends on motivation and influence to manage change in the company. Strategic leadership involves training and encouraging employees to work towards achieving the company’s vision.
Stringham (2012) also suggests that strategic management is a passive process that is system-oriented, while strategic leadership is an active process that focuses on developing skills and enhancing productivity in the firm.
Examples of CEOs who Demonstrate Strategic Leadership
Richard Branson is one of the well-known strategic leaders in the business world. As the founder of Virgin Group, he has been able to see the formation of over 400 companies under his name. He has made all Virgin employees believe in the brand and enforce the values of the Virgin Brand in their activities. Richard Branson has established the Virgin Brand as a fun and interactive brand. The cultural values of the Virgin Group are instilled in every employee. He has also focused on increasing productivity in the firm, which is an important characteristic of strategic leaders. He increases productivity by imparting three Virgin traits to his workers that include listening to each other, learning from each other, and enjoying what one does at the Virgin Group (Branson 2014, p. 198).
Jorgen Vig Knudstorp is the CEO of Lego Group. He is a strategic leader because he has enabled the company’s employees to build a commitment towards achieving the goals of the company. He has also ensured that the employees were a part of the management process by inviting their ideas on different strategic elements. He has proved that he established a good relationship between the management and the employees in the firm. Good relationships were also formed outside the firm to improve the company’s corporate social responsibility. As a strategic leader, he is influential in coordinating the talents and skills of the employees in the Lego Group. This coordination has enabled his employees to become more productive and to share the company’s vision (Reger 2007, p. 803).