Strategic Management

Sample Solution

     

Corporate Growth Strategies

Here's a breakdown of the different growth strategies and how they differ:

1. Horizontal Growth vs. Vertical Growth vs. Concentric Diversification:

   • Horizontal Growth: This strategy focuses on expanding within the same industry but introducing new products or services that target existing customers.

     • Example: A company that manufactures running shoes (horizontal) might also start selling athletic apparel like shirts and shorts (still targeting runners).

Full Answer Section

     

1. • Vertical Growth: This strategy involves expanding control over different stages in the production or distribution process (upstream or downstream).
     • Example:A clothing company (vertical integration backward) might acquire a cotton farm to secure its raw material supply.
   • Concentric Diversification: This strategy involves adding new products or services that are related to the existing business but target new customers.
     • Example:A company that manufactures athletic wear (concentric) might expand into manufacturing sports equipment like bicycles or basketballs (related products but targeting a broader audience interested in sports).

2. Internal vs. External Growth Strategies:

Tradeoffs: * **Internal Growth (Organic Growth):** Slower growth, requires strong internal capabilities, relies on reinvesting profits. * **External Growth (Acquisitions, Mergers):** Faster growth, potential access to new markets or technologies, risk of integration challenges and cultural clashes.

• Best Approach for International Entry:

The best approach depends on the specific situation. Here's a general guideline: * **Internal Growth:**  Suitable when the company has the resources and expertise to enter a new market independently. This might be preferable if cultural integration is a major concern. * **External Growth:**  Can be faster and provide access to established distribution channels or brand recognition in the target market. However, careful due diligence and integration planning are crucial to avoid potential pitfalls.

3. Interdependence of Functional Strategies:
   • Functional strategies are interdependent.They need to be aligned and work together to achieve the overall corporate strategy.
     • For example, the marketing strategy (targeting a specific customer segment) needs to align with the product development strategy (creating products that meet those customer needs) and the operations strategy (ensuring efficient production of those products).
   • Independent formulation might lead to inconsistencies and inefficiencies.
     • If the marketing team targets a high-end luxury market, but the operations strategy focuses on low-cost production, it would be difficult to deliver the desired product experience.

Remember, these are general guidelines. The best strategy for a company will depend on its specific goals, resources, and market conditions.