A Brief Overview of "Growth strategies in Strategic Management"

1. BUSINESS POLICIES
& STRATEGIC MANAGEMENT
A
PRESENTATION
ON
“GROWTH STRATEGIES”
By:
ZEBA RUKHSAR
DEPARTMENT OF BUSINESS ADMINISTRATION,
UTKAL UNIVERSITY
BHUBANESWAR,ODISHA,INDIA.

3.  ‘Growth Strategy’ refers to a strategic plan formulated
and implemented for expanding a firm’s business.
 Organisations select a growth strategy :
 to increase their profits
 to increase their market share or sales
 to increase their scale of operations
 to reduce the production cost per unit .
 These strategies are adopted to broaden the scope of their
customer groups,customer functions and alternative
technologies.

4.  Internal growth strategy refers to the growth within the
organisation by using internal resources.
 Internal growth strategy is achieved through increasing the
firm’s production capacity,employees & sale. It focuses on
developing new products, hiring more employees, growing
the customer base, opening new company-owned
locations,better marketing, etc.
 Benefit- Firms prefer this stategy as it preserves their
efficiency, quality & image unlike external growth
strategies.

5.  A firm can gain a competitive advantage by
concentrating on a specific technology,product or
market. A firm can use one, two, or all these three as
part of their efforts to excel within an industry.
 Examples- McDonald’s, Starbucks, and Subway are
three firms that have relied heavily on concentration
strategies to become dominant players.

7.  When a firm diversifies into business, which is not
related to its existing business ,both in terms of
marketing and technology , it is called conglomerate
diversification.
 The purpose of diversification is to allow the company
to enter new lines of business that are different from
current operations. Firms enter new & unrelated
portfolios of business.
 Example- Tata Group established Tata Steel, Tata
Consultancy Services(TCS), Tata Teleservices, Tata
Tea,etc.

8. Firms pursue this strategy for several reasons:
1. Reduction of risk
2. Increase in profits
3. Attain managerial competence
4. Financial Stability
5. Achieve higher growth rate
6. Continue to grow after a core business has matured
or started to decline.

9.  Vertical Integration is where new products or services ,
complementary to the existing product or service lines,
are added.
 Vertical Integration canbe-
i. Backward integration
ii. Forward integration

10. i. Backward vertical integration occurs when the firms
acquire or create the company that supply the firm- raw
materials and other inputs.
 Example: 1) Indian Railways established their own production
units like Rail Wheel Factory, Rail Coach Factory,Diesel
Locomotive Works,etc.
 2) Despite of being the leaders in Textiles, to strengthen his
Position, Dhirubhai Ambani decided to integrate backwards
and produce fibres.
ii. Forward vertical integration occurs when the firms acquire
or create the company that purchases its products and/or
services.
 Example : 1) Indian Railways also established Catering &
Tourism Corporation.
 2) New Zealand based Natural healthcare products company
‘Comvita’ purchased its Hong Kong distributor GreenLife Ltd.
Thus it achieved forward integration by having access to
Greenlife’s retail stores, sales staff and in store promoters.

11. i. Firms adopting this strategy can have a
regular and uninterrupted supply of raw
materials and inputs.
ii. Firms can acquire greater control over sales
and prices.
iii. Firms can reduce their overall costs.
iv. Firms can earn higher rate of return on
investment.
v. Firms can improve their competitive
position.

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