Organic, or ‘internal’ growth comes from within a business and should be mentioned alongside economies of scale (which are different) when you are discussing the way in which businesses can grow. Economies of scale allow one to reduce long run average cost to the minimum point and keep it there across a range of output because of the size of the business. Organic growth is one way you get that increase in size. A business can grow organically in a number of ways. It can expand its product range for instance, or enter new markets, or take on new shops and geographical areas. In doing this it runs the risk of getting too big too quickly, and suffering from diseconomies of scale, from rising AC and lower AR. Increasing productivity would allow a business to increase output by using technology better, or getting more out of its workers, leading to more output and sales value for the same or less factor cost. As you can see from this link, organic growth might be preferable to taking