From the course: Managing Your Cybersecurity Program through a Merger or Acquisition

Company strategies for accelerating business growth

From the course: Managing Your Cybersecurity Program through a Merger or Acquisition

Start my 1-month free trial Buy for my team

Company strategies for accelerating business growth

“

- [Instructor] The strategic goal of almost every company is to consistently improve in order to grow profits and increase shareholder value. As a result, most organizations' leaders are focused on developing growth strategies. So how do they do this? There are two ways a company can grow, organically or inorganically. Organic growth, which is most common, is where internal resources and efforts are used to increase sales. This could be through new product offerings, marketing efforts, or expansion into new markets. This is usually supplemented by increased operational efficiency through optimization of processes and procedures. Inorganic growth, on the other hand, is when a company strategically plans to increase the company's growth through external means, such as acquiring new companies or partnering or merging with other companies. These companies have often already established their presence in new markets or geographic regions of interest. By acquiring the target company, the buyer can grow at a fast pace because they suddenly gain access to already-established customers, distribution channels, and local expertise familiar with that market's functions and laws. They may also be able to leverage that company's technologies, patents, intellectual property, or the specialized knowledge necessary for improved innovation, expansion, and revenue growth. When a company opts for inorganic growth, it is getting to bypass the time-consuming process of developing the capabilities, customer bases, and market presence of the target company. While inorganic growth is quicker, it is also very risky. It involves the blending of two separate enterprises and the integration of different cultures, people, processes, and technologies. If the integration or synergies between the two merging parties do not align or materialize as expected, it may lead to huge financial losses or reduced profitability for the buying company. There are also risks due to constantly evolving market conditions, regulatory environments, or technological advancements, which can define if the M&A deal will be successful or a failure in the long run. Therefore, it is of utmost importance that careful planning and integration is well-planned.

Contents