Dulay, Karl Antoni T.

HCA

3:00-4:00 p.m

THC 109

November 26, 2022

Chapter 11 Formative Assessment: Identify and discuss the growth strategy of one hospitality
organization.

• Economies of scale–where increasing production lowers the average cost of each unit
(bed night, restaurant meal, etc.). In the hospitality industry, economies of scale
achieved through bulk purchase (in an attempt to minimize variable costs) are
insignificant compared to other sectors but other economies may be realized through a
sound knowledge of the product.
• A scalable business model–where increased revenues will cost less to deliver than current
revenues. This is clearly the case in the hospitality sector when all variable costs are
covered and significant contributions are made to fixed costs and also helps to explain
why hotels can offer such vast accommodation price reductions
• Influence and power–closely linked with market leadership through setting industry
standards, enhanced access to major customers and suppliers and prestige.
• Firms may seek growth due to significant increased demand from individual and other
key customers. Failure to do so might risk loss of business.
• Market leadership–where the firm is usually number one or two in a particular niche.
Being a market leader has particular advantages not only for securing extra business but
also in terms of becoming a preferred employer and likely future business partner with
former competitors. However, along with certain benefits come a number of
disadvantages including increased public scrutiny through inflated stakeholder
expectations of fairness and justice. The case below is some years old, however, the issue
raised is perennial

Chapter 11 Summative Assessment: Describe extrinsic and intrinsic growth in business.

Intrinsic growth - also known as organic growth, occurs when a company uses its own tools and
resources to expand. In most cases, this involves increasing production, developing new
products or services or other developmental strategies. Internal growth can take time since the
company must evaluate its growth potential, determine a strategy and then implement the
growth plan. However, internal growth is usually sustainable and can help improve the
company's overall success.

Extrinsic Growth - External growth, sometimes called inorganic growth, occurs when the
company desiring to grow partners with another organization to achieve its goals. Most
commonly, this type of growth happens through mergers or acquisitions. External growth does
provide several advantages, but it also limits the amount of singular control the original
company maintains.
REFERENCES: Indeed editorial team, (2021), Internal Growth: What It Is and Strategies for Success
| Indeed.com