Photo AI
Assess whether expanding by organic growth was the right decision for Mumtaz - Edexcel - A-Level Business - Question 1 - 2018 - Paper 2
Question 1
Assess whether expanding by organic growth was the right decision for Mumtaz. Organic growth occurs when a business expands internally and does not involve another ... show full transcript
Worked Solution & Example Answer:Assess whether expanding by organic growth was the right decision for Mumtaz - Edexcel - A-Level Business - Question 1 - 2018 - Paper 2
Step 1
Reasons for organic growth
Answer
Mumtaz Foods retains control, which is vital for a family-owned business. Organic growth preserves the existing management structure and culture, allowing for a stable environment for growth. Additionally, it enables Mumtaz to strategically enter new markets, such as ready meals and halal baby food, while also establishing its own restaurants and factories.
Step 2
Possible counterbalance
Answer
On the downside, organic growth can be a slow process. Despite existing since 1979, Mumtaz Foods has only gradually grown to its current size. The company's expansion in the Asian food market only highlights this limitation, suggesting that while organic growth is steady, it may not be rapid enough to compete effectively with other players in the market. Furthermore, limited financial resources restrict the potential for significant organic expansion, as Mumtaz primarily relies on internal funding.
Step 3
Potential judgement
Answer
Overall, while expanding through organic growth has allowed Mumtaz to retain control and build upon its strengths, it may not be the best strategy in a competitive market where quicker responses are necessary. Therefore, while organic growth has its advantages, exploring other avenues for expansion could better position Mumtaz to seize opportunities in the ready meals market.