Tab. 3-1: Growth strategies / growth potentials
|Intensive growth |integrative growth |diversification growth | |- market penetration |- backward integration |- concentric diversification | |- market development |- forward integration |- horizontal diversification | |- product development |- horizontal integration | |
Source: Fred David: How do we choose among growth strategies?, Managerial Planning jan / feb. 19?? and P. Kotler: Marketing Management chap. 3
Fred R. David is an Associate Professor of Business Policy at Mississippi State University He received his B.S. and MBA degrees from Wake Forest University and his PhD in Business Administration from the University of South Carolina Dr. David has written articles for the Academy of Management Review, long Range Planning, the Journal of Small Business Management, Management Psychology, and other business journal. He is currently working an a business policy text book entitled BUSINESS POLICY AND STRATEGY
Source: MANAGERIAL PLANNING JANUARY / FEBRUARY
How Do We Choose Among Alternative Growth Strategies?
The choice among alternative growth strategies can be considered the most important decision in an organization. In this article thirteen major strategies are examined along with specific environmental conditions that are particularly conducive to the success of each strategy. The author states that the guidelines provided in this article can benefit strategists in both large and small and profit and non-profit organizations
The purpose of this article is to provide an integrated framework for strategic planners that outlines the basic conditions under which various alternative strategies are most appropriate. The guidelines presented here are based on an integration of relevant strategic management articles and books. The guidelines can aid both small and large and profit and non-profit organizations in their efforts to choose optimal strategies. Thirteen major alternative company strategies are examined relative to specific environmental conditions that historically have been associated with that strategy's success. In addition, a current example of each type of strategy is provided.
No organization has the financial or human resources to pursue all the alternative strategies that possibly could benefit the firm. Therefore, vital strategic decisions have to be made to eliminate some strategies and to allocate organizational resources among others. All strategic decisions involve some tradeoffs such as long range versus short range considerations, high risk versus low risk preferences, and profit maximization versus social responsibility. Due to this inherent need for some subjectivity, some organizations unfortunately conclude that strategic decision. making is exclusively a subjective process. For instance, in some organizations, those individuals who have the most political clout simply get their way when it comes to strategic decisions.
In most cases, this degree of subjectivity in formulating strategy has resulted in a loss of competitive posture and profitability. The preponderance of both small and large and profit and non-profit organizations now recognize the critical need for objectivity in strategic planning.
The Alternative Growth Strategies
Gaining increased control over distributors is a particularly good strategy to pursue when the following conditions exist: • When the organization's present distributors are especially expensive, unreliable, or incapable of meeting the firm's distribution needs. • When the availability of quality distributors is so limited as to offer a competitive advantage to those firms...
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