Which statement describes internal growth vs external growth?

• A. Internal growth uses external resources
• B. External growth uses internal resources
• C. Internal growth uses own resources; external growth involves acquisitions or mergers
• D. External growth reduces capabilities

Answer: (C)

Internal growth comes from using the firm’s own resources to expand, such as increasing output, improving processes, or developing products with existing capabilities. External growth happens when a company grows by joining with or acquiring another business, like mergers, acquisitions, or strategic alliances that bring in new markets, resources, or competencies. This distinction is exactly captured by describing internal growth as using own resources and external growth as involving acquisitions or mergers.

The other ideas don’t fit as neatly: growing internally with external resources mixes concepts, while external growth relying on internal resources blurs the boundary between the two approaches, and external growth isn’t inherently about reducing capabilities.