3. These strategies are adopted when firms remarkably broaden the scope of their customer groups, customer functions and alternative technologies either singly or in combination with each other. Before opting for diversification, the following basic questions must be seriously considered: (a) Whether it brings a positive synergy, to the company? (b) Create different quality versions of the product. But in practice it can be both, hostile or friendly. Joint ventures take many forms and structures. Growth strategies that include mergers, acquisitions and strategic alliances are usually considered to be healthy. The expansion or growth strategies are further classified as: 3. If as a result of a merger, a new company comes into existence it is called as ‘amalgamation’. A firm selecting an intensification strategy, concentrates on its primary line of business and looks for ways to meet its growth objectives by increasing its size of operations in its primary business. The eagle eyes of raiders are on the lookout for cash rich and high growth rate companies with low equity stake of promoters. Internationalization Expansion Strategy. Merger, as a growth strategy, implies combination (or integration) of two or more companies into one. In its second part the paper suggests alternative growth strategy paths for service firms. A growth strategy is a plan to increase revenue. may become a challenging task to handle for management and staff of the organisation. (iii) It can avail of external economies in respect of transport, insurance, banking services etc. ITC, Godrej, Kirloskars etc. Foreign markets provide additional sales opportunities for a firm that may be constrained by the relatively small size of its domestic market and also reduces the firm’s dependence on a single national market. A cooperative strategy is a strategy in which firms work together to achieve a shared objective. If the willingness is absent, it is known as ‘takeover’. Each method of entering an overseas market has its own advantages and disadvantages that must be carefully assessed. Entering into a Joint venture is a part of strategic business policy to diversity and enter into new markets, acquire finance, technology, patent and brand names. Modernisation is a growth strategy in the sense that it helps to achieve more and qualitative production at lower costs; thus helping to increase sales and profits for the enterprise.  These strategies are adopted to broaden the scope of their customer … As such, diversification may lead to cost reduction and profit-maximization. For example- a cement manufacturing company undertakes the civil construction activity; it will be a case of diversification with forward linkage. Growth strategies may be classified into two categories: Internal growth strategies are those in which a firm plans to grow on its own, without the support of others. Latest topics: Podcast Building a great digital business. With forward integration, firms can acquire greater control over sales, distribution channels, prices, and can improve its competitive position through differentiation and customer support. (i) Making common purchases at low prices. The firm expands forward in the direction of the ultimate consumer. from the other country. Takeover is an acquisition of shares carrying voting rights in a company with a view to gaining control over the assets and management of the company. On the other hand, when manufacturing units combine with business units which distribute their product; it is known as forward integration or merger. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences. Vertical integration may be either backward integration or forward integration. In this strategy, a company will be able to grow ... 2. A consolidation is a combination of two or more business units to form an entirely new company. Failure to ensure effective co-ordination, may lead to substantial reduction in the advantages planned for diversification strategy. (iii)Organisational restructuring might be a major problem to introduce and successfully implement new technology. International strategy is a type of expansion strategy that requires firms to market their products or services beyond the domestic or national market. Takeover may be defined as ‘a transaction or series of transactions whereby an individual or group of individuals or company acquires control over the management of the company by acquiring equity shares carrying majority voting power’. In the fast expanding economies of today, adoption of growth strategies by business enterprises is a must for the survival, in the long-run; lest they should be swept away by environmental influences, especially competition, technology and governmental regulations. 4. Vertical merger arises as a result of integration of those units which are engaged in different stages of production of product. Combination of firms may take the merger or consolidation route. 2. Left with no choice, the small business will then look at what it currently has, right where it currently is. These acquisitions are called ‘management buyouts’, if managers are involved, and ‘leveraged buyout’, if the funds for the tender offer come predominantly from debt. In a tender offer, one firm offers to buy the outstanding stock of the other firm at a specific price and communicates this offer in advertisements and mailings to stockholders. As growth entails risk, especially in a dynamic economy, a growth strategy might be described as a safest policy of growth-maximising gains and minimising risk and untoward consequences. As growth entails risk, diversification, as a growth strategy, implies developing a wider range of products to diffuse risk or to reduce risk associated with growth. Global Strategy. External Growth Strategy 3. Strategic Partnerships And Peer Support Are Two Powerful Growth Strategies Forbes - Geri Stengel. The firm try to increase market share for present products in current markets through increase of marketing efforts like increase of sales promotion and advertising expenditure, appointment of skilled sales force, proper customer support and after sales service etc. (Maintaining the market share in a growing market means, obviously, increasing sales). (d) Results in improved supply of essential materials, components, plants etc. In the latter case, a merger is known as a takeover. Postal Service. You got into business to solve a problem for a certain audience. (iii)Vertical merger facilitates research in production processes because of integration of processes. In takeover, the seller management is an unwilling partner and the purchaser will generally resort to acquire controlling interest in shares with very little advance information to the company which is being bought. Joint ventures with multinational companies contribute to the expansion of production capacity, transfer of technology and capital and above all penetrating into global market. (v) Diversification adds to the goodwill of a firm; because of its brand name associated with a variety of product items. Definitions