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To create a good business development strategy, it is important to understand what organic and inorganic growth are and the differences between the two.

Business growth or development has become one of the determinants of the success or failure of a business itself.

Both in product sales and services, business growth needs to be thought through carefully so that the direction is always clear.

Well, so that you don't take the wrong steps, you must know what organic and inorganic growth are and the differences between the two.

Read more in the article below.

What is Organic Growth

Quoted from Indeed, organic growth is the growth of a business that is obtained from the production of regular activities and operations such as product sales or services.

A company that wants to grow organically must utilize its business model, practices, and employees to increase sales and services.

The efforts made by a business to grow organically also vary, ranging from product innovation, improving services, advertising in the media, and others.

This is also the basic difference between organic and inorganic growth later.

Reported by Preferred CFO, here are some of the advantages of using the organic growth method:

• Company management understands the business well. Because there are no mergers or acquisitions of companies, the company's management understands the company's business strategy and operations better.
• There are no significant integration challenges due to restructuring in the company. This is one difference between organic and inorganic growth, companies with organic growth do not face integration and restructuring challenges.
• Have more control over the company's goals and the business being run. Without mergers and acquisitions, the company will have more control over the business.
• Business is more sustainable. As explained, organic growth is more sustainable for the development of a business.

What is Inorganic Growth

Businesses that grow through inorganic growth carry out mergers and acquisitions or by expanding the company.

According to Indeed, inorganic growth can develop with several efforts such as opening a business in another location, taking out loans, or adding business lines.

Expansion or addition of business locations is an important part of inorganic growth, also an important effort for the development of the company.

Inorganic growth will increase the company's assets, operations, liabilities, and liquidity.

Despite the challenges of entering new markets and restructuring, inorganic growth has the following advantages:

• Faster business growth. Many businesses grow up to three times faster with inorganic growth efforts.
• Increased market share. Market share increases tend to be faster.
• Increased knowledge and experience. Merging with other companies will be in line with the increase in knowledge and expertise that the company has to develop the business.
• More competitive in market competition. New sources of knowledge and human resources, assets, increased market share means your business will be more competitive in the competition.
• Ease of taking credit. Taking credit for business development will be easier after a merger or acquisition.

Differences Between Organic and Inorganic Growth

Indeed says there are some basic things that are the differences between organic and inorganic growth.

In general, the difference between organic and inorganic growth can be seen from their meanings. Organic growth is a company strategy to develop internally or from within the company, while inorganic growth is from external/outside the company.

In addition to these basic things, here are some lists of differences between organic and inorganic growth:

1. Timeframe

The first fundamental difference between organic and inorganic growth in business is the timeframe of the impact that will be felt on the business.

Inorganic growth will have an impact on increasing in the short term through acquisitions or additions of business locations.

Meanwhile, increasing business with an organic growth strategy will require a longer and more stable period of time.

2. Risk

Inorganic growth will carry a big risk if you merge or acquire a company that has financial problems.

Another risk that may also arise is having to add business lines and enter new markets.

Meanwhile, the risk of organic growth tends to be lower because it is carried out simultaneously with efforts to develop existing products/services.

3. Impact on Business

A business strategy using organic growth will focus more on the products/services that the company already has at that time, so that the impact on the business will not be too great.

Meanwhile, in inorganic growth, greater challenges must be faced because there could be a termination or replacement of new products/services in the company.

In terms of market competition, organic growth will experience tougher competition.

For inorganic growth itself, competition will be more focused because the merger of companies will make it easier to lead competition in the market.

4. Effect on the Company's Future

For the future of the company, the difference between organic and inorganic growth can be seen from the rate or steps of development.

Organic growth will create a more stable future and a safer rate for the company's development.

While due to mergers or acquisitions, inorganic growth will make the company have more stakeholders who play a role in the company and reduce individual control.

5. Availability of Resources

One of the significant benefits of inorganic growth is the increase in resources from employees, experts, and other resources.

Meanwhile, organic growth has limitations because it relies on existing resources in the company.

Which is Better for Business?

Now, after knowing the difference between organic and inorganic growth, you need to choose the best of the two for your business.

Both have their own roles, advantages and risks in the development of the company. Not all companies or types of businesses are suitable for both.

If you want to develop a product or service, organic growth will be better. However, when the goal is to expand the company's business, you can adopt inorganic growth.

Companies with good business development are those that can adopt both business strategies in a balanced way.

In order not to choose the wrong business strategy, it is important to understand how to analyze both strategies.

The goal is of course to produce a strategy that can be implemented well and optimally.

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Have you ever wondered what forecasting is in the business world?

If you are running a business, making strategic decisions based on in-depth analysis and accurate predictions is very important. One tool that supports this process is forecasting.

Forecasting is not just predicting the future based on historical data; but also becomes the foundation for intelligent and adaptive planning in facing market dynamics.

This article will outline the importance of forecasting in a business context, revealing how this technique helps anticipate market changes, as well as supporting efficient resource allocation.

What is Forecasting?

Forecasting is a technique for predicting future events based on historical data and current conditions.

In the business world, forecasting is used to estimate sales, market demand, or economic indicators.

Companies use forecasting results to make decisions about hiring, expansion, and other business strategies.

Investors also use forecasting to analyze stocks, determine transaction timing, and identify market trends.

Although forecasting attempts to predict the future, it is important to remember that the results are not always 100% accurate.

Because, there are several unexpected factors such as sudden economic changes or natural disasters that affect forecasting results.

Forecasting Method

After knowing what forecasting is, also know the method for carrying it out. Actually, there are two main approaches used in forecasting, namely qualitative methods and quantitative methods.

Both of course have their respective advantages and disadvantages. The following is the explanation:

Qualitative Method

This method is subjective and based on the judgments and opinions of experts or consumers. Qualitative methods are used when no past data is available.

Some examples of qualitative methods include:

• Delphi Method: Asking a group of experts to provide their estimates anonymously and then averaging the results after several rounds of discussion.
• Market Research: Using surveys and interviews with consumers to predict future product demand.
• Scenario Analysis: Developing several plausible scenarios based on assumptions about future conditions.

The following are the advantages and weaknesses of qualitative methods:

Advantages:

• Flexible and able to adapt to changing conditions.
• Incorporate knowledge and experience that may not be captured in numerical data.
• Can handle unusual events.

Weaknesses:

• Subjective and prone to bias.
• Can ignore or underestimate certain factors.
• Focusing too much on recent events and ignoring long-term patterns.

Quantitative Methods

This method is objective and mathematical, which uses numerical data from the past to make predictions for the future.

This method is suitable for use when there is sufficient past data and the data pattern is expected to continue in the future.

Some examples of quantitative methods include:

1. Time Series Analysis:

This method analyzes historical data (such as sales figures) to find patterns or trends.

For example, if sales always increase during the holiday season, we can predict that sales will increase again this year.

2. Regression Analysis

Assess the relationship between the dependent variable and one or more independent variables.

For example, companies can use regression analysis to understand how advertising spending affects sales.

By understanding this relationship, companies can make better plans.

3. Econometric Models

This model combines economics, mathematics, and statistics to analyze economic data. For example, how changes in interest rates affect investments.

The following are the advantages and weaknesses of quantitative methods:

Advantages:

• Objective and reduces bias.
• Consistent and repeatable.
• Processing large amounts of data.

Weaknesses:

• Stiff and difficult to adapt to sudden changes.
• Cannot easily include qualitative factors or expert opinions.
• Requires sufficient historical data.

Forecasting Goals for Business

Forecasting in business is not just an ordinary prediction tool.

Rather, this technique is a strategic process for analyzing historical data to make smarter and more informed decisions.

In a business context, forecasting has several important objectives, including:

1. Helps in determining goals and business plans

One of the main benefits of forecasting is that it helps businesses set realistic and measurable goals based on in-depth analysis of historical and current data.

By having accurate data, businesses can evaluate what is considered success in terms of change, growth, or improvement.

2. Assist in preparing budgets

Forecasting also helps in budgeting by providing a clear picture of trends and changes that may occur in the market.

This allows businesses to allocate resources more efficiently, such as when it comes to products, services or marketing strategies.

3. Helps in Anticipating Changes in the Market

Forecasting helps businesses to anticipate changes in the market.

By understanding emerging trends and changing consumer behavior, companies can take proactive steps to adapt their strategies and remain competitive in a dynamic marketplace.

By utilizing forecasting effectively, companies can position themselves strategically to face uncertainty and take advantage of existing opportunities.

After reading the explanation above, hopefully you understand what forecasting is and its purpose for business.

Although forecasting has many benefits, it is important to remember that it is not an exact science.

Companies must always be ready to adapt to unexpected changes and regularly evaluate and update their forecasting models.

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The GMS is a crucial forum where share owners gather to make important decisions that will affect the future of the company.

In it, there are intense discussions about company policies, performance evaluations of leaders, and vital decisions such as structural changes.

In this article, let's discuss GMS in more depth, starting from its meaning, function, to types.

What is GMS?

A General Meeting of Shareholders (GMS) is an official meeting regularly held by a company and attended by the board of commissioners, directors and shareholders.

The GMS has special authority that is not owned by the board of commissioners or directors.

This is regulated in Law Number 40 of 2007 concerning Limited Liability Companies.

To hold a GMS, the company must fulfill the following requirements:

• The GMS must be invited by the Board of Directors or Board of Commissioners.
• Notification to shareholders must be made no later than 30 days before the date of the GMS.
• The GMS is only attended by legal shareholders.
• Decisions are taken through deliberation to reach consensus. If this is not achieved, a decision is taken based on the majority vote.

GMS function

The GMS is a forum where shareholders have the opportunity to be directly involved in making important company decisions. GMS has a very important function for the company, namely:

1. Establish Company Policy

This meeting is a forum for shareholders to jointly formulate and review company policies for both the short and long term.

For example, whether the company will expand its business to new areas or whether it will launch new products.

These decisions are very important because they will affect the company's future growth and success.

2. Check the Company's Financial Health

One of the main agendas at the GMS is examining the company's financial reports.

Shareholders will look at whether the company made a profit, how much debt it has, and how money was used over the last year.

This is important to ensure that the company is well managed financially.

If there is a problem, shareholders can ask for an explanation and solution from company management.

3. Assess the performance of the Board of Commissioners and Directors

The GMS is also an opportunity for shareholders to evaluate the performance of company executives such as the board of commissioners and directors.

They will see whether the leaders have carried out their duties well and achieved the targets they have set or not.

If their performance is less than satisfactory, shareholders can decide to replace them with other people who are more competent.

4. Establish Dividend and Profit Sharing Policies

When a company makes profits, shareholders need to decide how those profits will be used.

At the GMS, they will discuss whether profits will be distributed to shareholders in the form of dividends or reinvested into the company for business development.

This decision must consider the company's short-term and long-term needs.

5. Amend the Company's Articles of Association

The GMS can change the basic rules that govern the company. These changes could be:

• Merging a company with another company.
• Separating a department from the company.
• Disband the company.

This decision must be approved by the majority of shareholders.

The aim is to ensure that this major change is carried out with the support of many parties so that the company remains stable and has a clear direction.

6. Deciding on the Dissolution of the Company

The GMS can also decide on the dissolution of the company if the company experiences serious financial problems or cannot continue its operations.

This decision is usually taken if the company experiences serious financial problems or cannot continue operations.

Dissolution of the company is the final step and requires approval from shareholders.

Types of General Meeting of Shareholders (GMS)

The GMS is an important forum where shareholders gather to make important decisions about the company's direction and policies.

Based on the time it is held, the GMS is divided into two types, namely the Annual General Meeting of Shareholders (AGMS) and the Extraordinary General Meeting of Shareholders (EGMS).

Annual General Meeting of Shareholders (AGMS)

The AGMS is held at least once a year, no later than six months after the company's financial year ends.

The following are several important agenda items that are usually discussed at the AGMS:

• Company annual report.
• Company financial reports.
• Dividend distribution.
• Appointment and dismissal of members of the board of commissioners and directors.
• Changes to the articles of association.
• Merger, consolidation or separation of companies.

Extraordinary General Meeting of Shareholders (EGMS)

The EGMS is held to discuss and decide on extraordinary or urgent matters that cannot be postponed until the next AGMS.

The following are some of the agendas that are usually discussed at the EGMS:

• Changes to the articles of association.
• Merger, consolidation or separation of companies.
• Appointment or replacement of curator.
• Postponement of debt payment obligations.
• Filing a bankruptcy petition.
• Termination of business activities.

General Meeting of Shareholders Mechanism

A GMS is an important meeting that is strictly regulated in accordance with the applicable regulations in the company's articles of association.

The following are the main stages in the mechanism for holding a GMS:

1. Summons to the GMS

The summons for the GMS must be made by notifying all shareholders no later than 30 days before the implementation date.

The invitation must state the time, place and agenda that will be discussed at the meeting.

This is done to ensure that all company stakeholders can manage their schedules and participate in important discussions.

2. Validity of the GMS

To be considered valid, the GMS must be attended by shareholders representing more than half of the total shares with voting rights of the company.

If the number of members is not met on the first day, the GMS can be continued on the next working day provided it is attended by shareholders representing more than 1/3 of the total number of shares with voting rights.

This is important to ensure that the decisions taken at the GMS reflect the will of the majority of shareholders.

3. Discussion of the GMS Agenda

The GMS agenda includes various strategic matters that influence the company's direction and policies.

Shareholders have the opportunity to discuss and decide on the company's annual report, financial reports, dividend distribution, appointment or dismissal of members of the board of commissioners and directors, as well as changes to the company's articles of association.

Decisions at the GMS are reached through deliberation to reach consensus. If there is no agreement, the final decision is taken by majority vote.

4. GMS Report

After the GMS is held, an official report will be prepared by the notary who was present at the meeting.

This report records the results of discussions, decisions taken, as well as voting results on each agenda item discussed.

The GMS report must be submitted to all shareholders no later than 30 days after the GMS is held. The aim is to ensure transparency and accountability of the company's decision-making process.

As explained above, the GMS is an important forum for shareholders to participate in monitoring and making strategic decisions for the company.

By following this clear and orderly mechanism, the GMS ensures that every decision taken is the result of a transparent and fair discussion in accordance with the interests of all shareholders.

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