Organic vs Inorganic Pathways to Market Leadership

There are two ways to become a leader in a market. The first is organic, that is to build step by step the success of your business over time, and the second through synergies and acquisitions (inorganic).

When a company opts for organic development knows that it will take time. To build solid foundations presupposed patience and creating a single course and strategy for the whole company. To grow a company organically in order to become a market leader must sometimes take risks aiming at the creation of a new market and not recycling the existing one. It needs to innovate and to define the way in which the competition will copy. Organic growth also means that a company manages better and more productive the existing technology, the workforce

It was a great chance for the Davis Service Group to expand in a new market and become a leader in textile industry. The Davis Service Group had the know-how and in combination with the Berendsen’s experience on local markets and the infrastructures that were already existed was more than sure that maximizing revenue was a matter of time. Besides, setting up a new competitor company in Europe would be costly and would create problems concerning cultural differences, language and staffing. This last element is very important as the leading firm adapts a local management strategy believing in local managers and their potentialities in driving their home market.

The strategy that Davis Group followed, (horizontal integration), led to the decrease of operating and fixed costs and in a three years period a return on investment to its shareholders. The fact that both firms operate in the same sector gave them a wide range of customers and more profitable business. Additionally, both firms have managers that were aware of procedures and there was no need for extra knowledge, apart from the fact that they could exchange