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The Growth of Business# Internal -v- External Growth There are two main ways in which a business can grow - internal growth and external growth. Internal growth (Often referred to as organic growth) refers to a situation where a business increases its size through investing in its existing product range, or by developing new products. This will normally be financed through the use of retained profits (from previous trading years), bank loans or, if the business is a PLC, through the issue of shares. This is a slower and safer method of expansion than external growth. External growth Involves much greater sums of money and takes place through the use of mergers and takeovers (often known as growth through amalgamation, or simply integration). Regardless of the method of growth, there are several reasons why firms wish to grow: - To achieve economies of scale and see the average cost of production decline. - To achieve a greater...

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