GROWTH STRATEGIES and Crisis In Business Growth
Presented by: Sahana Archana Gitanjali Prithwiraj
Strategy Strategy means a deliberate and wellplanned course of action designed to achieve specific objectives.
Growth strategy Growth strategy may be defined as a strategic plan formulated and implemented to expand the operations of biz firm.
TYPES OF GROWTH STRATEGIES
Competitive Advantage – something which gives the organisation some advantage over its rivals Cost advantage – A strategy to seek out and secure a cost advantage of some kind - lower average costs, lower labour costs, etc.
Market Dominance:
Achieved through:
Internal growth i.e. Through Expansion and diversification Acquisitions – mergers and takeovers A merger means combination of two or more firms into one. It may occur in two ways: (a) Merger by Absorption, and (b) Amalgamation
The merger may result in: Horizontal Integration. Vertical Integration. Concentric. Conglomerate.
Internal business level strategies –
Downsizing – selling off unwanted parts of the business – similar to contraction Delayering – flattening the management structure, removing bureaucracy, speed up decision making Restructuring – complete re-think of the way the business is organised
New product development: to keep ahead of rivals and set the pace. Developing new or modified products for sale in the existing market Contraction/Expansion – focus on what you are good at (core competencies) or seek to expand into a range of markets?
Price Leadership – through dominating the industry – others follow your price lead Global – seeking to expand global operations Reengineering – thinking outside the box – looking at news ways of doing things to leverage the organisation’s performance
SUB-CONTRACTING Sub- Contracting implies hiring another firm to perform some of the manufacturing process or to give sub-assemblies that will be included in the finished product. Sub-Contracting helps the firm to concentrate on it’s core biz area and thus it can grow.
Overall Growth Strategies Summarization Market Penetration
Market Development Product Development Expansion of existing Businesses Alternatives for Growth Diversification into new Businesses
Vertical Integration Forward & Backward Related
Unrelated
Crisis of Business Growth Business Growth
Financing Growth
Financing Growth Crisis
To grow a firm needs to be able to expand – plant, equipment, buildings, human resources, etc. To do this it needs to acquire finance Crisis may arise if it fails to generate the required finance needed to do the business.
External Growth
Difference in work ethics and culture may result takeovers, mergers and buyouts not to work correctly resulting in a crisis.
Managing Growth
Managing Growth
Businesses are human organisations – humans are difficult to manage! Larger organisations may suffer from diseconomies of scale Larger organisations may necessitate changing roles for the managers/leader/owners There may be a divorce between ownership (the shareholders) and control (the Board)
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