However, there are a few good examples of successful diversification:. This type of strategy can be very risky, according to yliya-86.ru A small company will need to plan carefully when using a diversification growth strategy. Hasbro grwoth company launched baby care products under Playskool brand. Offensive reasons may be conquering new positions, taking opportunities that promise greater profitability than expansion opportunities, or using retained cash that exceeds total expansion needs. Some businesses merge with or acquire other businesses. Some common growth strategies in business include market penetration, market expansion, product expansion, diversification and acquisition. The store has modern, yet relaxing mood.
The statistics are grim. But if that's not good enough for you—or if you recognize that staying small doesn't necessarily guarantee your business's survival— there are examples groowth companies out there that have successfully made the transition from start-up to small business to fully-thriving large business. That's the premise behind the search Keith McFarland, an entrepreneur and former Inc.
So I studied the companies who had done it to learn their lessons. Part of getting from A to B, then, is to put together a growth strategy that, McFarland says, "brings you the most results from the least amount of risk and effort. The bottom line for small businesses, especially start-ups, is to focus on those strategies that are at the lowest rungs of the ladder and then gradually move your way up as needed.
As you go about developing your growth strategy, you should first consider the lower rungs of what are known as Intensive Growth Strategies. Each new rung brings more opportunities for fast growth, but also more risk. The least risky growth strategy for any business is to simply sell more of its divesification product to its current customers—a strategy perfected by large consumer goods companies, says McFarland. Finding new ways for your customers to use your product—like turning baking soda into a deodorizer for your refrigerator—is another form of market penetration.
The next rung up the ladder is to devise a way to sell more of your current product to an adjacent market—offering your product or service to customers in another city or state, for example. McFarland points out that many of the great fast-growing companies of the past few decades relied on Market Development as their main growth strategy. For example, Express Personnel now called Express Employment Professionalsa staffing business that began in Oklahoma City quickly opened offices around the country via a franchising model.
This growth strategy involves pursuing customers in a different way such as, for example, selling your products online. When Apple added its retail division, it was also adopting an Alternative Channel strategy. Using the Internet as a means for your customers to access your products or services in a new way, such as by adopting a rental model or software as a service, is another Alternative Channel strategy.
A classic strategy, it involves developing new products to sell to your existing customers as well as to new ones. If you have a choice, you would growth strategy diversification example like to sell your new products to existing customers. That's because selling products to your existing customers is far less risky than "having to learn a new product and market at the same time," McFarland says.
New Products for New Customers. Sometimes, market conditions dictate that you must create new viversification for new customers, as Polaristhe recreational vehicle manufacturer in Minneapolis found out. For years, the company produced only snowmobiles. Then, after several mild winters, the company was in dire straits. Fortunately, it developed a wildly-successful series of four-wheel all-terrain vehicles, opening up an entirely diversificatoon market.
Similarly, Apple pulled off this strategy when it introduced the iPod. What made the iPod such a breakthrough product was that it could be sold alone, independent of an Apple computer, but, at the same time, it also helped expose more new customers to the computers Apple offered. If you choose to follow one of the Intensive Growth Strategies, you should ideally take only one step up the ladder at a time, since each step brings risk, uncertainty, and effort.
The rub is that sometimes, the market forces you to take action as a means of self-preservation, as it did with Polaris. Sometimes, you have no choice but to take more risk, says McFarland. Dig Eexample New Product Development on exaample Cheap If you've exhausted all steps along the Intensive Growth Strategy path, you can then consider growth through acquisition or Integrative Growth Strategies. In some cases, a merger can end in total disaster, as in the case of the AOL-Time Warner deal.
Nevertheless, there are three viable alternatives when it comes to an implementing an Integrative Growth Strategy. This growth strategy would involve buying a competing business or businesses. Employing such a strategy not only adds to your company's growth, it also eliminates another barrier standing in your way of future growth—namely, a real or potential competitor. McFarland says that many of breakthrough companies such as Paychexthe payroll processing company, and Intuitthe maker of personal and small business tax and accounting software, acquired key competitors over stratfgy years as both a shortcut to product development and as a way to increase their share of the market.
A backward integrative growth strategy would growth strategy diversification example buying one of your suppliers as a way to better control your supply chain. Doing so could help you to develop new products faster and potentially more cheaply. For instance, Fastenala company based in Winona, Minnesota growth strategy diversification example sells nuts and bolts among exakple thingsmade the decision to acquire several tool and die makers as a way to introduce custom-part manufacturing capabilities to its larger clients.
Acquisitions can also be focused on buying component companies that are part of your distribution chain. For instance, diversificatino you were a garment manufacturer like Divesrificationwhich is based in Fort Myers, Florida, you could begin buying up retail stores as a means to pushing your product at the expense of your competition. Massive conglomerates such as General Electric are essentially holding companies for a diverse range of businesses based solely on their financial performance.
That's how GE could have a nuclear power division, a railcar manufacturing division and a financial services division all under the letterhead of a single company. This kind of growth strategy tends to be fraught with risk and problems, says McFarland, and is rarely considered viable these days. Dig Deeper: The Power of Diversification Growth strategies are never pursued in a vacuum, and being willing to change course in response to feedback from the market is as important as implementing a strategy in a single-minded way.
Too often, companies take a year to develop growth strategy diversification example strategy and, by the time they're ready to implement examlpe, the market has changed on them, says McFarland. Sometimes the best approach is to take it one rung at a time. You're about to be redirected We notice you're visiting us from a region where we have a local version of yliya-86.ru READ THIS ARTICLE ON.
Enter your email to reset your password. Or sign up using:. Sign in if you're already registered. How to Develop a Business Growth strategy diversification example Strategy. There are many ways to guide a business through a period of expansion. Darren Dahl is a contributing editor at Inc. He also works as a collaborative growth strategy diversification example and editor and has partnered with several high-profile authors.
Dahl lives in Asheville, North Carolina. Turning a small business into a big one is never easy. In other words, most businesses start exapmle and stay there. What follows are some of the lessons McFarland learned from his study of the breakthrough companies and how they can help you create a growth strategy of your own. Developing a Growth Strategy: Intensive Growth. Dig Deeper: New Product Development on the Cheap. Developing a Growth Strategy: Integrative Growth Strategies.
If you've exhausted all steps along the Intensive Growth Strategy path, you can then consider growth through acquisition or Integrative Growth Strategies. Dig Deeper: Advice on Growth Through Acquisition. Developing a Growth Strategy: Diversification. Dig Deeper: The Power of Diversification. Developing a Growth Strategy: How Will You Grow? Growth strategies are never pursued in a vacuum, and being willing to change course in response to strategyy from the market is as important as implementing a strategy in a single-minded way.
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Marketing Examples: Diversification
TYPES OF STRATEGIES: Diversification Strategies, Conglomerate Diversification Strategic Management Business Management.
Video embedded · What Is Diversification? Diversification occurs when a business develops a new product or expands into a new market. Often, businesses diversify to.
Growth strategies in business can include diversification, product expansion and acquisitions. business 2 image by Nathalie P from yliya-86.ru.