Growth Strategies For Businesses
The approaches you have to follow for your firm’s increase are as follow: The term approach means an overall, deliberate and planned course of actions to reach goals that are specific. Growth Strategy identifies a plan for expanding businesses business formulated and employed. Every company must develop its own growth strategy based on surroundings and its characteristics. Internal growth strategy pertains to the growth inside the organization by using internal resources. The business may be enlarged through product development, market growth, expanding the line of merchandise etc. Expansion to face and leads to better utilisation of the resources. Business expansion supplies economics of large scale operations.
What are the four growth strategies?
A. Market penetration approach:
This approach involves selling products. To penetrate and capture their market, a company might cut costs, improve distribution network, increase promotional activities etc.B. Market Development strategy: This technique entails expanding existing products to market that is new. This strategy targets reaching expansion or customer segments. Market development aims to improve sales by capturing new market area. C. Product Development strategy: This approach involves creating new products for markets that are new or for markets. Item development means making some adjustments in the merchandise to provide the customers for their own purchase value.
Diversification is another kind of internal growth strategy. The purpose of diversification is to permit the business to enter new lines of company that are distinct from current operations. There are four types of diversification: Vertical diversification – Horizontal diversification – Concentric diversification – Conglomerate diversification – Vertical Diversification – Vertical diversification can also be called as vertical integration. The objective of vertical diversification is to enhance economic and marketing capacity of the firm. Vertical diversification includes: i. Backward integration: In backward integration, the business expands its business activities so that it moves back to its present line of business.
Example: Despite of being the leader in Textiles, to strengthen its position, Dhirubhai Ambani decided to incorporate backwards and produce fibre. Ii. Forward integration: In forward integration, the business expands its activities so that it moves ahead of its current line of business. Example: New Zealand based Natural healthcare products business Comvita purchased its Hong Kong distributor Green Life Ltd. And therefore achieved forward integration by having access to green lifes stores, sales staff and in store promoters. Horizontal Diversification: Horizontal diversification involves inclusion of parallel products to the current product line. For instance: A company, manufacturing fridge might enter into manufacturing air conditioners. The objective of horizontal diversification is to expand market area and also to cut down competition. Concentric diversification: When a company diversifies into business, which is linked to its present business it’s called concentric diversification.
C. Product Development.
Product development is vital for any business to succeed and excel in it’s area of operation. Think of this ” A product which is developed with clear focus on target customers and then able to offer them contant upgrade” you must be thinking of Apple. Yes! you are right one of the most successful company to curate products to its target customers and constantly offering better version every year. Thereby creating a highly satisfied customer experience driven referrals and new sales when they launch new or upgraded versions almost every year.
On the other hand launching new products, again keeping in mind same set of customer profiles and analyzing carefully their next appetite from the same brand is kind of a secret sauce. Apple has successfully expanded it’s product lines to the same set of customers hence creating a unified experience across major digital devices.
These product development strategies are almost universal in top performing companies be it Soft products or FMCG for example.
D. Market Development
Market Development strategy can be adopted by launching new product lines, entering new markets and geographies, loyalty programmes to existing customers and encouraging them to buy more are key to top line acceleration.
Redwood Syndicate has been in business for over 10 years, helping companies successfully grow their businesses.