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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.
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 Food Group, being a family-owned business, retains control over its management, structure, and culture. This structure enables it to effectively plan for and control its growth. Organic growth is often a preferred strategy, especially for businesses like Mumtaz, who have a strong understanding of their market and can respond to consumer needs without the complexities that arise from mergers or acquisitions.
Additionally, expanding into the ready meals market aligns with Mumtaz's existing product offerings, allowing them to utilize their established brand and distribution channels.
Step 2
Possible counterbalance
Answer
However, organic growth could be limited by several factors. For instance, Mumtaz has only gradually increased in size since its establishment in 1979, suggesting that its potential for organic growth may be constrained by market factors or internal capabilities. The slow pace of growth could hinder the company's ability to effectively compete with rivals in the ready meals market, where consumer preferences are rapidly evolving.
Step 3
Potential judgement
Answer
In conclusion, while organic growth allows Mumtaz to maintain control and capitalize on its established brand, it may not be the best strategy for capturing opportunities in the dynamic ready meals sector. The company needs to assess whether this strategy can keep pace with competitors who may more aggressively pursue growth. Therefore, while organic growth has its advantages, diversifying approaches may better serve Mumtaz in the long run.