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INTEGRATIVE GROWTH STRATEGY

PRIYA TALWARSHALINI SINGHMANISHA GAUTAMTAJINDER KAURSOURABH HARJAISHIVAMLAXMIKANT SHARMAIMRAN KHAN

Learning Objectives Explore strategic innovation as a growth

strategy. Discuss intensive growth strategies—

growing within the current market. Explain integrative growth strategies—

growing within the industry. Examine diversification growth

strategies—growing outside the industry.

Consider growing by going global.

Factors affecting growth decision: Demand for product/service Size of the market Leadership  success

To Grow or Not to Grow

Stages of Growth and Company Focus     

 

Startup Early Growth

High Growth

Stable Growth

Capital Customer Distribution

Cash Flow Marketing

Resources Capital Management

Innovation Maintaining Success

Factors That Affect Growth

Market factors: Size and Characteristics Competition Intellectual-property rights Predictability

Management factors: Ability to adapt and change the business

over time even if the business is successful Re-evaluation of key metrics

Problematic leadership tendencies: Loyalty to the original founding team Task orientation–Focus Single-mindedness of vision–Discipline Working in isolation

Scaling factors: Inability to understand and respond to the

business environment

A Framework for Growth

Framework for growth Scan and assess the environment Plan the growth strategy Hire for growth Create a growth culture Build a strategy advisory board

Growth Strategies Strategic Innovation strategies: change the

game in an industry or market Intensive growth strategies: exploit

opportunity in the current market Integrative growth strategies: exploit growth

within the industry as a whole Diversification strategies: exploit opportunities

outside the current market/industry Global strategies: exploit opportunities in the

international arena

STRATEGIC INNOVATION New concepts are not generally

attractive to established companies in the early stages because: They break the mold. The early markets are generally small with

low margins. Large companies typically wait to see how

the new model fares in the market and then they either change their model or attempt to acquire the entrepreneur’s company.

Growing within the Current Market

Market penetration Increase sales through effective

marketing strategies within the current target market

Gradually expand Promoting additional uses for products Attract customers from competitors by

advertising advantage over competitor Go after noncustomers

Market development Take product or service to a broader

geographic area Franchising

Dealerships Service franchises Product franchises

Market development (cont’d) Licensing- steps for a successful

transaction: Decide exactly what will be licensed Understand/define the benefits the buyer will

receive from the transaction Conduct thorough market research Conduct due diligence on potential licensees Determine the value of the license agreement Create a license agreement

Product development Develop new products/services for

existing customers or offer new versions of existing products

Breakthrough products may come through unplanned means (i.e. brainstorming, problem-solving, etc.)

Growing Within the Industry Vertical integration strategies

Growing forward/backward within the distribution channel

Horizontal integration strategies Buying up competitors or starting a

competing business Modular or network strategies

Focus on core competencies and outsource the rest

Diversification Growth Strategies Investing in or acquiring products/businesses

which are outside the core competencies and industries

Use when all other growth strategies within the current market/industry have been exhausted

Synergistic strategy Acquire products/services unrelated to the

company’s core products/services Conglomerate diversification-acquiring businesses

that are unrelated to the company’s current business

Growing by Going Global

Born global – a company that generates at least 25% of its sales in the first three years from international marketplace and derives competitive advantage from outsourcing and selling in several countries

Characteristics of successful globalization: A global vision from the start Internationally experienced managers Strong international business networks Preemptive technology A unique intangible asset Closely linked product/service extensions A closely coordinated organization on a world-

wide basis

Finding the Best Global Market

Information sources: International Trade Statistics

yearbook of the United States International Trade Administration

offices in Washington, D.C. and at district levels

Department of Commerce

INTEGRATIVE GROWTH STRATEGY FOLLOWED BY APPLE Inc.

The iPad Mini was launched last month, although it is still called “iPad” and just looks like a smaller version of iPad, it is a totally new Apple product and indicating that Apple is entering small tablet market.

Apple is pursuing a diversification growth strategy through the creation of iPad mini. Because it shares the same distribution resources, use the same information system and provide same application downloads, this is a related diversification opportunity.

Its strategy is based on the fact of the shrinking PC market and the growing tablet market, and is led by the ongoing “bring-your-own-device” (BYOD) trend.

Tim Cook also described Chinese market as an “extremely exciting” one, which currently makes up 26% of Apple’s revenue.

It gains great popularity and good word of mouth through its premium pricing, excellent design and innovative culture. In China, Apple is now definitely a premium brand that labels good quality and good taste.

Export Financing Sources:

Bank financing Internal cash flow Venture capital or private investor

capital Prepayment, down payment, or

progress payment from foreign client Assurances:

The Import-Export Bank

Foreign agents, distributors, and trading companies

Choosing an intermediary Due diligence work to assure the right

partner Choosing a freight forwarder

Handles all aspects of delivering the product

New Venture Action Plan Identify market, management, and scale

factors that may affect the growth of the business.

Determine which growth strategy is most appropriate for the business.

Indentify potential international markets for the product or service.

Develop a plan for globalization of the company at some point in the future.

THANK YOU