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Blog | Fri, 19 Aug 22

What is a growth strategy for any business?

A growth Strategy is that’s used when an organization wants to expand the number of markets served or products offered, either through its current business or through new business.

What is a growth strategy for any business?

A growth Strategy is that’s used when an organization wants to expand the number of markets served or products offered, either through its current business or through new business.

For Instance:

Growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products and services.

Types of Growth Strategy

 

  1. Concentration

  2. Vertical Integration

  3. Diversification

 

Concentration

An organization that grows using concentration focuses on its primary line of business or trying to compete successfully within a single industry and increases the number of products offered market penetration, market development or markets served in this primary business.

Example:

A company using concentration that focuses on developing innovative audio products and has one of the world’s leading manufacturers of speakers for home entertainment, automotive, and pro audio markets with sales of more than $2 billion.

Vertical Integration:

It is a competitive strategy by which a company takes complete control over one or more stages in the production or distribution of a product.

For instance:

To increase the firm's power in the marketplace, reduce transaction costs,s and secure supplies or distribution channels.

There are some types of vertical integration:

1. Forward Vertical Integration

2. Backward Vertical integration

3. Horizontal Vertical Integration

 

 

 

Forward Vertical Integration

In forward vertical integration, the organization becomes its own distribution and is able to control its outputs.

For instance:

Apple has more than 287 retail stores worldwide to distribute its products.

Backward Vertical integration

In backward vertical integration, the organization becomes its own suppliers so it can control its inputs.

For instance:

eBay owns an online payment business that helps it provide more secure transactions and control one of its most critical processes.

Horizontal Vertical Integration:

In horizontal integration, a company grows by combining with competitors.

For Instance

Zong is well known and established company of networking bought another company of warid which is its competitor and grows.

Diversification:

It is a competitive strategy used to expand a firm’s operation by adding market products and services

For Instance:

An auto company may diversify by adding a new car model or by expanding into related market line trucks.

Diversification has two types.

1. Related Diversification

2. Un-Related Diversification

 

Related Diversification

Related diversification happens when a company combines with other companies in different, but related industries. Or when a firm moves into a new industry that has important similarities with the firm’s existing industry or industries 

For instance:

Sharing resources and bundling products.

Un-Related Diversification

Enter into a new business that has no obvious connection to any of the company's values chain activities in its present industry or industries.

 For instance:

An auto start making food products or jewelry items etc.

 

 

 

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