When one that implies mergers and acquisitions. Business

When talking about business growth the most precise definition would be what considers it as the process of improvement of a company that drives it to reach certain levels of success. The growth of the business can be achieved in two different ways: either increasing the income received by the organization thanks to an increase in the sales volume of its products or an increase in the revenue collected for its services; or by increasing the profitability of operations, which is achieved by effectively reducing costs. HOW TO INTERNATIONALIZE MY FAMILY COMPANY, DOWNLOAD THE FREE GUIDEBusiness growth: definition and types There are two main types of business growth, a definition that can be drawn from the way in which this momentum is obtained. Thus, it can be differentiated between 1. Internal or organic growth: it is the modality that implies a slower process. It is usually the initial mode of growth, which accompanies organizations in their first steps, since its appearance. It requires a lot of effort and careful planning to provide the desired effects.By increasing financing by shareholders, who choose to contribute more capital.Porreinversion of profits in the business.The main disadvantage of this approach is the investment in time that it requires, a period that allows the main competitors to expand and obtain competitive advantages. However, aside from this inconvenience, this type of business growth has essential benefits. The most significant is the fact that it allows the company to be able to maintain a healthy economic situation. Because external debts are not being accumulated, which tend to imply the payment of interest, this type of company is in a better position to maintain solvent growth. Also, control of the company does not exceed its borders. 2. External or strategic growth: it is the one that implies mergers and acquisitions. Business growth, by definition, when it is external can be carried out in different ways, although the most common are:Through the search for external financing.Through defusions and acquisitions.Both approaches tend to rely on bringing external financing into the business to make the expansion a reality, a strategy that can lead to a position of leverage, especially if one considers that one of its main negative aspects is that The control of the company may be left to shareholders outside the organization. When it occurs as a result of a merger, it implies that the group has joined another. In these circumstances, usually, a company will issue shares in exchange for shares of another company. Both entities have more equivalent positions than when an acquisition is formalized. In these cases, there is a takeover, when a group acquires control interests in another, which implies that it has bought at least 50% of the shares of the other company.External business growth allows the rapid expansion of business, but they entail a series of problems, among which are:The cultural difference between the two companies that come together.The possible appearance of disagreements among managers who are accustomed to working with different practices and systems.The increase in complexity in the management of human resources that occurs as a result of the change in business.

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