10 Questions
Growth through concentration is suitable when the industry has low growth potential.
False
A growth strategy through concentration involves increasing the scope of a company's business definition.
False
Forward integration involves producing a company's own raw materials.
False
A company using integration strategy serves different customers.
False
Concentric diversification occurs when a company introduces a new product that is unrelated to its existing products.
False
Diversification is a growth strategy that involves focusing on existing markets with present products.
False
Conglomerate diversification allows a company to launch a product in a completely new market that has no relation to the company's current offerings.
True
Cooperative strategies for growth can involve mergers, acquisitions, strategic alliances, and joint ventures.
True
International strategies for growth require firms to only focus on their national or domestic market.
False
Retrenchment strategies refer to an approach that organizations use when they are seeking to expand their market share.
False
Study Notes
Growth/Expansion Strategies
- Growth strategy is implemented through concentration, integration, diversification, cooperation, and internationalization when the management is not satisfied with the present status and there are favorable opportunities available.
Growth through Concentration
- Focuses on existing markets with present products using market penetration to increase market share and sales within an existing market or customer base.
- Involves attracting new users for existing products or introducing newer products in existing markets by concentrating on product development.
- Applies when the industry possesses high growth potential and the firm is strong enough to sustain the growth.
Growth through Integration
- Involves serving the same customers but increasing the scope of the business definition.
- Involves taking up more activities than taken up earlier, such as backward integration (producing own raw materials) or forward integration (processing own output before marketing).
Growth through Diversification
- A technique to expand a business by adding new products and services to the company's offerings.
- Types of diversification include:
- Concentric diversification: developing a new, improved product related to an existing product.
- Conglomerate diversification: launching a service or product that's completely new to the company and has no relation to its current market.
Growth through Co-operation
- Firms can cooperate with competitors to expand market potential through strategies like mergers, acquisitions, joint ventures, and strategic alliances.
- Two or more concerns may join their resources to take advantage of financial or marketing factors.
Growth through Internationalization
- Requires firms to market their products or services beyond the national or domestic market.
- Involves assessing the international environment, evaluating capabilities, and forming strategies to enter foreign markets through exporting or setting up subsidiaries in other countries.
- Requires a different strategic perspective than national context strategies.
Retrenchment or Retreat Strategies
- A strategic approach adopted when organizations face decline or crisis, requiring reduction in size, costs, or operations to restore profitability.
Learn about growth and expansion strategies for enterprises, including concentration, integration, diversification, cooperation, and internationalization. Understand how these strategies can help in expanding and diversifying operations to capitalize on favorable opportunities and changing environments.
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