Davis Case Study: International Expansion
International Expansion: Davis Case Study
The natural course of life for business is to grow. A company wants to grow to increase profits, to increase customer base, to increase its value, to innovate, to enter new markets, to build new product base, etc. The key is to develop, plan and execute a strong growth strategy. The strategy should outline what business or market to expand to, when to expand and how to expand. There are two ways in which a company can expand: Organically and inorganically (Growing a company by international acquisition, 2008). We will describe the ways in which Davis Service Group successfully expanded, how the European Union helped in the process, and how it helped Davis to face the challenges of international expansion.
Organic vs. Inorganic Growth
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The company is building on its existing resources and grows through its own profits and increased revenue. The growth happens naturally and it takes time. The company that grows naturally is building on its core competencies. For example, Infosys is known for building its business through its own organic growth, concentrating on their competencies rather than merges and acquisitions (Juneja, n. d.). The company is growing at its own pace that the management is comfortable with. By growing naturally the company usually doesn’t face the cultural or integration challenges that often happens in inorganic growth. By growing naturally the company keeps its own identity (Juneja, n. d.). Disadvantages of organic growth are that the company may stretch its resources and capital too thin so it is fundamental to effectively manage the organic growth and keep the pace that is manageable (Kuntz,
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