Tradeoffs between an internal and external growth strategy goes together in an organization. The internal organization which focuses on the internal growth of the firm look upon the comforts for the internal people and the facilities are provided internally for the employees. The employees are boosted up and they are encouraged from giving them bonus, over time etc. the internal growth of an organization helps it to groom itself completely but this sets a backward area.
The internal growth comprises on the employees moral, the expansion of the organization, more opportunities are overwhelmed for the employees and they are trained in such a manner that they become sharp and confident and boast them in an orderly manner. As a result only the internal growth is focused and the external has to go through a tough time as the only focus becomes the internal growth and the cost is ignored.
The production cost gets higher and the demand is affected which leads to a decrease in the sale of goods in the market (Clare & Stutely, 1995).
On the other hand when the external growth is focused the budget and the cost are kept in view and the people are mainly focused on the output in the market. Cost cutting is observed and this even leads to the suspension of employees from their job. The cost of the product is kept in view and then decisions are taken to avoid any kind of disturbance in the demand of the product.
This creates misconception among the employees and the owners and a huge gap is created among relations. Employees are not focused and not considered for increment. These are the tradeoffs between external and internal growth strategy (Triant, 2006).
Which approach is best as an international strategy? Why? The best approach for an international strategy would be external growth. The external strategy is developed based on different ways to increase the companies net worth. External growth focuses on building multiple relationships with business partners or different franchises in order to maximize their revenue. Internal would not be the best ...
In international strategy external growth is focused as it is more profitable for them. In international trade only the cost and the demand is focused. Profit is only the motive of the international traders and therefore external trade strategy is the best approach.