GROWTH
STRATEGIES
Prepared by: Hilwana Abd KARIM
LEARNING OUTCOME
◦ Growth Strategies
◦ Implications of Growth for the Firm
◦ Overcoming Pressures on Human
Resources, Employee Management &
Entrepreneurs’ Time
GROWTH STRATEGIES
The Ansoff Matrix
Products
An analytical tool that Existing New
helps managers to devise
their product and market
Markets
Existing Market Product
growth strategies
Penetration Development
It shows the various New Market Diversification
strategies that a business Development
can take depending on
whether it wants to
market new or existing
products or enter new or
existing markets
GROWTH STRATEGIES : MARKET
PENETRATION
◦ Aim of the strategy: ◦ But it is difficult to achieve growth if the
◦ To maintain or increase share of the market is saturated
current market with current products
◦ To secure dominance of a growth
market or restructure a mature market ◦ In a stagnating market increase in sales is only
by driving out competition
possible by grabbing market share from rivals.
Hence competition will be intense in such
◦ involves an increase in sales of markets
existing products to existing markets -
selling more of the same to the same
people ◦ Risks are low
AGGRESSIVE PROMOTION
CELCOM DIGI
INCREASE USAGE
GROWTH STRATEGIES : MARKET DEVELOPMENT
◦ This involves
◦ Selling the same product to different people
◦ Entering new markets or segments with existing products
◦ Gaining new customers,new segments,new markets
◦ Entering overseas markets
◦ Market development will require changes to marketing
strategy e.g. new distribution channels, different
pricing policy, now promotional strategy to attract
different types of customers
Difference market segment
GROWTH STRATEGIES : PRODUCT
DEVELOPMENT
◦ This is the development of new ◦ Product development is used when:
products for the existing market ◦ The Firm has strong R&D capabilities
◦ New products come in the form of: ◦ The market is growing
◦ New products to replace current products ◦ There is rapid change
◦ New innovative products ◦ The firm can build on existing brands
◦ Product improvements
◦ Competitors have better products
◦ Product line extensions
◦ New products to complement existing
products
◦ Products at a different quality level to
existing products
APPLE PRODUCT:iPHONE
RISK OF PRODUCT DEVELOPMENT
KFC TOM YUM
EXAMPLE :NEW COKE 1985
GROWTH STRATEGIES : DIVERSIFICATION
Diversification strategy involves branching
out into new products and new territories
Businesses diversify for the following
reasons:
• Being in a single industry can be very risky
• New technologies, new products or fast-changing
consumer preferences can destroy a particular
business
GROWTH STRATEGIES : DIVERSIFICATION
Related Diversification Strategy
• Refers to a situation whereby a business diversifies into
another area that is strategically fit with the existing
business. Related diversification is meant to allow the
business to capitalize on synergies as follows:
The transfer and share of valuable expertise, technological know-how and other competitive capabilities
To consolidate the related activities into a single operation to achieve lower costs
To capitalize on a well-established brand name
STARBUCK BUY NEW FACTORY
GROWTH STRATEGIES : DIVERSIFICATION
Unrelated Diversification Strategy
• Refers to a situation whereby a business diversifies
into another area that is totally different from the
existing business activities. Unrelated diversification
may be carried out:
In order to distribute and spread the risks of doing business across different industries
When the business is currently operating in an unattractive industry and there is a need to look for other
possibilities
GROWTH STRATEGIES : EXAMPLE
o In recent years both Royal Bank of Scotland and Bank of Scotland have grown rapidly through:
o Market penetration
• Increased sales of banking financial services in Scotland
o Market development
• Growing presence south of the border following acquisitions.
• Bank of Scotland and the Halifax Bank merge to create HBOS
• RBS took over Williams and Glyn in 1970 and also runs Tesco’s banking
operation
o Product development
• Growing involvement in insurance
• RBS subsidiary Direct line revolutionised motor insurance
o Diversification
• Selling insurance in England might be seen as new markets and new
products
LEARNING
◦
OUTCOME
Growth Strategies
Implications of Growth for the Firm
◦ Overcoming Pressures on Human
Resources, Employee Management &
Entrepreneurs’ Time
IMPLICATIONS OF GROWTH FOR THE FIRM
Pressures on Human Pressures on The
Resources Management of Employees
Firm will face problems of Many entrepreneurs find
employee morale, employee that as the venture grows,
burn out, and an increase in they need to change their
employee turnover. management style
Pressures on Entrepreneur’s Pressures on Existing
Time Financial Resources
Time devoted to growth -Financial resources can
must be diverted from other become stretched
activities -Resource slack
LEARNING
◦
OUTCOME
Growth Strategies
◦ Implications of Growth for the Firm
Overcoming Pressures on Human
Resources, Employee Management &
Entrepreneurs’ Time
OVERCOMING IMPLICATIONS OF
GROWTH FOR THE FIRM
Overcoming Pressures on Existing Overcoming Pressures on the Mgt of
Human Resource Employees
◦ Using professional employer ◦ Participative style of management:
organizations (PEOs) for various HR Manager involves others in decision
activities making
◦ Giving employees regular feedback
◦ To institute participative style of
◦ Identifying problems along with a management:
proposed solution ◦ Establish a team spirit
◦ Communicate with employees
◦ Provide feedback
◦ Delegate responsibility
◦ Provide continuous training to employees
OVERCOMING IMPLICATIONS OF GROWTH FOR THE FIRM
Overcoming Pressures on
Financial Control
Entrepreneurs Time
Basic principles of time management Managing cash flow
Principle of desire Compare budgeted or expected cash flows
with actual cash flows
recognizing that one is a time waster
Principle of effectiveness Managing inventory
entrepreneur should try to complete each Physically count inventory periodically
task in a single session Link the needs of a retailer with the
Principle of analysis wholesaler and producer
then analyze how time has been spent
Managing fixed assets
Principle of teamwork
Involves long-term commitments and large
Principle of prioritized planning investments
Managing costs and profits
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