Growth Strategies

Growth Strategies

Growth Strategy- An organization substantially broadens the scope of one or more of its business in terms of their respective customer group, customer functions and alternative technologies to improve its overall performance

There are two types of Growth Strategies

• Internal

• External

Internal growth strategies relate to the following actions:-

• Designing and developing new products/services

• Building on existing products/services for new opportunities

• Increase sales of products/services through better market reach

• Expanding existing product lines and service offerings

• Reaching out for new markets

• Expansion into foreign markets

External growth strategies:

Merger:

In a merger two firms, agree to move ahead and exist as a single new company. Merger can be

• Merger of equals: both companies are of equal sizes.

• Merger of unequal's : large company merge with smaller one

• Voluntary process: consent of both companies.

Name of new merged entity is usually a combination of both parent companies. For example, in the 1999 merger of Glaxo Wellcome and SmithKline Beecham, both firms ceased to exist when they merged, and a new company, GlaxoSmithKline, was created. Mergers are mostly financed by a stock swap. Both companies surrender their stocks and stock of the new company is issued as a replacement.

Horizontal merger: A horizontal merger involves two firms operating and competing in the same kind of business activity. Example: Exxon - Mobil

Vertical mergers: Vertical mergers occur between firms in different stages of production operation in same industry. Example: Footwear Company Merging with Leather Tannery

Conglomerate Mergers: Conglomerate mergers involve firms engaged in unrelated types of business activity. Example: General Electric buying NBC television

Concentric Mergers: Concentric mergers take place when two firms from different but "adjacent" industries merge. Example: If an auto manufacturer and a...