Blog
ResearchBuster: Organic Growth
7th June 2011
This ResearchBuster provides some details and links to businesses that have focused their growth strategy on organic (or internal) growth rather than external growth. We’ll add further examples and evidence over the coming weeks and months, so please bookmark the blog entry for future reference.
Example: Poundland (discount retailer)
Poundland is a UK-based variety store chain which sells every item in its stores for a single price - £1. It was formed in 2000 and has grown grown strongly due to its clear focus on a constantly rotating product range sold at a single price point. Ten years after starting-up, Poundland was sold to a US venture capital firm for £200 million, when its revenues had grown from nothing to just short of £400m per year. The organic strategy was simple - open new stores in suitable locations and repeat the winning formula of offering heavily discounted products to a predominantly female customer base.
Data:
Revenues in the Year to March: 2010: £510m (320 stores) 2009: £396m 2008: £330m 2007: £310m 2006: £281m 2005: £240m 2004: £196m 2003: £193m (75 UK stores)
Follow-up links:
Poundland’s sales soar during recession
Discount retailer Poundland plans to open super stores
Middle class fuels Poundland growth
Example: BSkyB
Back in 2004, BSkyB set a long-term objective of growing its household subscriber base to 10 million households/customers. The strategy was to grow organically by focusing on investment in content and innovation. The successful strategy has transformed BSkyB’s financial performance:
Data:
2003: Revenue £3.2bn Profit £128m
2010: Revenue £5.9bn Profit £1,173m
Follow-up links:
Sky key facts and figures (at March 2011)
BSkyB hits 10 million customer target
BSkyB’s organic growth strategy (Business studies blog)
Example: Subway
Subway is an American restaurant franchise that primarily sells submarine sandwiches (subs) and salads.
Back in March 2001, Subway announced plans for a massive expansion across the UK which it claimed would create nearly 20,000 jobs in the next 10 years. At the time, Subway had just 52 franchised outlets in the UK, a tiny number compared with its 14,800 around the world in 2001
Data:
As of April 30, 2011, Subway operates 34,501 stores in 98 countries and territories. There are currently 1,500 Subway franchises in the UK and the company has recently announced a new objective to grow that to 3,000 outlets in the next three years
Follow-up links:
How Subway tops the fast food chain