Organic growth companies

We have completed two OGIs and the third will be released in May 2005. In addition, we have a new research project in place that is trying to find out how those high organic growth companies are able to accomplish what so few companies are able to do. And the preliminary results are surprising and counter-intuitive. 

UPS s growth has historically been evolutionary and organic. The company had trouble in its initial international expansion efforts because it tried to export UPS people to foreign countries and to override local culture and customs. But it learned. UPS has now reinvented itself by moving from the package or document delivery business to serving the entire supply and distribution chain. 

The final screen that we applied to the sixty-two snrviving companies was our mergers and acquisitions (M A) screen. ITere onr pnrpose was to eliminate companies that prodnced a material part of their growth during 1997-2002 by acquisitions and not throngh internal, core, or organic growth. 

Table 7.7. Hall of Fame (companies on both the 2001 and 2002 Organic Growth Indices)...

Growth. The term has become a mantra in business. As the other chapters in this volume suggest, driving organic growth for the leaders of established companies is essential, urgent, and critical. As the other chapters also suggest, it is also extraordinarily difficult. 

Commit to support the organization as a top-tier growth company that can adapt to change in an ongoing regulated environment... 

One very simple analysis for assessing future expectations is to calculate the split of a company s share price into the part which will be derived from the business as it is at present and the part which will come from organic growth. The value of the business as is can be interpreted as the (hypothetical) value of the business if all additional investments were stopped and all earnings were distributed to the owners. The - usually positive - difference between this value and the company s share price can be interpreted as the value of the company s growth options (Pig. 2.5). 

In the words of a senior executive who advocated the purchase, Marion Laboratories had the premier sales organization in the United States. But, he added, It had no research worth the name, and fairly mediocre manufacturing facilities. Reality struck quickly. By 1993, earnings per share dropped sharply. Senior managers had become fully aware of the basic weaknesses due to the expiration of patents in its major businesses. Brandt, Growth Company, pp. 555-557, 560-564, provides an excellent review of the weaknesses of Marion Merrell Dow that led to its sale to Hoechst. See also Derdak, ed.. International Directory, vol. 9 (1994), pp. 32S-329 Hoover s Handbook (1996), p. 313. 

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