The Difference Between Internal and External Growth
Definition
Internal growth
Internal growth refers to expanding a business through its own resources and capabilities.
Definition
External growth
External growth involves collaborating with or acquiring other businesses.
Internal Growth: Expanding from Within
Characteristics of Internal Growth
- Organic: Expansion occurs naturally within the business.
- Gradual: Growth happens steadily over time.
- Controlled: The business retains full ownership and decision-making power.
Methods of Internal Growth
- Increasing Sales: Expanding market reach, improving products, or boosting marketing efforts.
- Expanding Production: Investing in new facilities, technology, or automation to increase output.
- Developing New Products: Innovating and diversifying the product line to attract more customers.
- Opening New Locations: Expanding into new markets by establishing additional outlets or branches.
Internal growth is ideal for businesses prioritizing control and long-term stability over rapid expansion.
External Growth: Collaborating or Acquiring
- External growth is:
- Collaborative: Involves other businesses or entities.
- Rapid: Can achieve faster expansion compared to organic growth.
- Complex: Requires careful planning and execution.
Methods of External Growth
- Mergers and Acquisitions (M&As)
