Growth Strategies / Business development.pptx

A presentation on business development strategies with real life examples.
Explains the ansoff product-market expansion grid, expansion techniques, internal/external growth,...

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1. 71772112130- Gobinath M 71772112146- Jerome Christo S

2. Growth strategy “Plan that companies make to expand their business in a specific aspect such as yearly revenue, number of customers, or number of products.” 2

3. Reasons for expansion Emergence of new opportunities
Lofty growth objectives
Firm is a leader in its industry and wants to protect its dominant position
Sheer size translates into superior clout (influence) 3

4. Reasons for expansion Volatile situations
Surplus resources
Regulatory scenario
Economies of scale and scope 4

5. Ansoff’s Product-Market Expansion Grid Presented by Igor Ansoff (1968) Illustrates the various intensification options available to a firm Two dimensions: Products & Markets. Four growth strategies. 5

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8. Market Penetration The firm seeks to achieve growth with existing products in their current market segments, aiming to increase its markets share. Achieving growth through existing products in existing markets Least risky since it leverages many of the firm’s existing resources and capabilities 8

9. Motivate existing customers to buy products more frequently and in larger quantities. Modes : Volume discounts, bonus cards, price promotion, heavy advertising, regular publicity, wider distribution, effective customer relationship management. Market Penetration strategies 9

10. Attract competitors’ customers Modes: Attractive product design, high product quality, attractive prices, stronger advertising, and wider distribution Market Penetration strategies 10

11. Target new customers in current market. Modes : Price concessions, better customer service, increasing publicity and other techniques Market Penetration strategies 11

12. Coca-Cola: Market penetration on an annual basis by creating an association between Coca-Cola and Christmas, such as through the infamous Coca-Cola Christmas advert, which has helped boost sales during the festive period. Market Penetration strategies 12

13. The firm develops new products targeted to its existing market segments New products yield additional sales and market share. Products that have low brand loyalty and/or short product life cycles – desirable Product Development 13

14. Modes : Expand sales through developing new products Create different or improved versions of the current products Make necessary changes in existing products to suit the different likes and dislikes of the customers Product Development 14

15. Product Development 15

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18. Market Development The firm seeks growth by targeting its existing products to new market segments. Introduce existing products in new markets. 18

19. Pursuit of additional market segments (making minor modifications in the existing products that appeal to new segments) or geographical regions (increase sales force, appoint new channel partners, sales agents or manufacturing representatives, franchise operation) Market Development 19

20. Market Development 20

21. Diversification The firm grows by diversifying into new businesses by developing new products for new markets. 21

22. Diversification Entry of a firm into new lines of activity Value creation through economies of scale and scope, or market dominance Risk management Reasons : Government policy, performance problems, uncertainty about future cash flow 22

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25. Diversification Internal development: Investments in new products, services, customer segments, or geographic markets including international expansion. External modes: Acquisitions and joint ventures. 25

26. Horizontal growth: Firm expands products into new geographic areas/increases the range of products and services in current markets. Vertical growth: Firm takes over a function previously provided by a supplier or a distributor. Diversification 26

27. Reliance industries (Diversification) Energy Telecommunication Information and communication technology Petrochemicals, natural gas Retail Entertainment, mass media Textiles. 27

28. Diverse portfolio of Reliance industries 28

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31. Expansion Through Intensification Intensification: Expansion within the existing line of business Safeguarding the present position and expanding in the current product-market space to achieve growth targets Modes: Market penetration, Market development and Product development 31

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33. Expansion Through Integration Association and integration among different firms Driven by need for survival and also for growth by building synergies 33

34. Consolidation : One company acquires the assets and liabilities of another company. Facilitated by mergers and acquisitions. Merger creates a new legal entity, while an acquisition absorbs one company into another Expansion Through Integration 34

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36. Merger 36

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38. Acquisition 38

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40. Increase market share
Avoid the costs of developing new products internally and bringing them to the market Reduce the risk of entering new business Speed up the process of entering the market Become more diversified Reduce the intensity of competition by taking over the competitor’s business. Expansion Through Integration 40

41. Vertical Integration : Integration of firms involved in different stages of the supply chain. Expansion Through Integration 41

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44. Horizontal Integration : Acquisition of additional business in the same line of business or at the same level of the value chain (combining with competitors) Expansion Through Integration 44

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46. Economies of scale-achieved by selling more of the same product. Economies of scope – achieved by sharing resources common to different products. (‘synergies’). Increased bargaining power over suppliers and downstream channel members. Reduction in the cost of global operations made possible by operating plants in foreign markets. Synergy achieved by using the same brand name to promote multiple products. Horizontal Integration – Advantages 46

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48. International Expansion “Establishing significant market interests and operations outside a company’s home country.” Benefits : Additional sales opportunities Extending the product life cycle Securing key resources Low-cost labour 48

49. International Expansion (Amazon) 49

50. Risks Political risks (e.g. instability of host nations) Economic risks (e.g. Fluctuations in the value of the country’s currency). Increased coordination and distribution costs Trade barriers Logistics costs Cultural diversity, etc. 50

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52. Internal and External Growth Strategies Internal Growth Rely on effects generated within the firm itself, such as new product development, other product related strategies, and international expansion Organic growth (sustainable) External Growth Rely on establishing relationships with third parties, such as mergers, acquisitions, strategic alliances, joint ventures, licensing, and franchising Inorganic growth (risky) 52

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54. Thankyou ... 54