Strategic Business
Analysis
GROWTH
STRATEGIES
Presented by: Group 3
INTRODUCTION
A growth strategy is a plan of
action that allows a company to
achieve a higher market share than
it currently has. It is not necessarily
focused on short-term earnings and
operates with the components of
goal, people, product, and tactics
The success of this strategy
depends on its access to capital;
five forces of competition; and
external forces.
Growth is achieved by choosing any 3. Product Development
of the following: - Introducing new products other than
its current product line to an existing
market
1 .Market Penetration
- Increasing market share by acquiring 4. Diversification
new customers through intensive - Moving into another industry other
marketing efforts than the one it currently competes in
2. Market Development
5. Horizontal Integration
- Introducing products to a new market that
- Acquiring a competitor or a business that
is eaither untapped or dominated by a
complements the firm's business portfolio
competitor
Growth Stratgey #1
MARKET PENETRATION
The most straightforward method for attracting new clients is
through market penetration. This is especially crucial in rapidly
increasing marketplaces where new clients frequently emerge.
This may either require a differentiation strategy that provides
better features or traits, or a cost-leadership strategy to out-price the
competition.
Growth Strategy #2
MARKET DEVELOPMENT
MARKET DEVELOPMENT is a business strategy where a
company seeks to expand its customer base by entering new
markets. This often involves introducing existing products
or services to new geographical areas or target audiences.
It's about finding untapped opportunities beyond the current
customer base to drive growth.
Market Development
ADVANTAGES DISADVANTAGES
• Revenue Growth • High Initial Investment
• Brand Recognition • Increased Operational Complexity
• Global Reach • Cultural Changes
• Optimized Resource Utilization • Market Risks
• Long-Term Sustainability
PRODUCT
DEVELOPMENT
Typically refers to all stages
involved in bringing a product
from concept or idea through
market release and beyond. In
other words, product
development incorporates a
product’s entire journey.
ADVANTAGES DISADVANTAGES
*Keeping pace *Riskiness
*Seizing opportunities *Extra cost
*Providing opportunities *Evolving markets
*Being newsworthy * Competition
DIVERSIFICATION Oth er reaso n s fo r
Div ersificatio n are:
A growth strategy that *Alignment to its corporation vision
involves entering into a *Entry in new markets where barriers to
new market or industry- entry are high
*Change in corporate direction because of
one that your business
stagnant growth or government regulations
doesn't currently operate
*Creating synergies among existing
in while also creating a
business
new product for that new
market.
Tw o Co m mo n Ty p es o f
D iv ersified Co m p an ies
1. Conglomerate
2. Holding Companies
DIFFERENT TYPES OF
DIVERSIFICATION STRATEGY
Horizontal
Differentiation
Concentric
Differentiation
Conglomerate
Differentiation
ADVANTAGES OF HORIZONTAL
INTEGRATION
Reduces Competition, increases market share
Achieves economies of scale by increasing
and Customer base, greater control over
supplier leeverage, getting volume pricing, increases barriers to entry for
discounts, and reducing manufacturing potential competitors
costs. that create a competitive advantage over
remaining competitors
Buying an established and well-known
Easier international expansion to quickly
brand may be less expensive in
establish its market presence by acquiring a
the long run rather than building a brand
homegrown company
from the ground up.
DISADVANTAGES OF HORIZONTAL
INTEGRATION
Risk of diseconomies of scale as production
Aligning and merging business processes output grows, the average unit cost rises. The
and technology because production process may become less efficient
of clashes in management style and culture after reaching a certain threshold in production
as well as incompatible output.
technology platforms that are more Requires significant funding and access to capital to
expensive to integrate. acquire or merge with a competitor. Overconfidence
with the market's potential and income projections
will likely lead to losses and difficulty to recoup the
Possible violation of anti-trust and/or
investment.
monopolistic laws because of a
significant reduction in competition in the It requires considerable financial capacity. The main
financial requirerment is to acquire or merge with a
market that may limit consumer
company in a similar industry. Also, there will be cost
choices and impact consumer welfare. implicated after the integration to optimize the business
operations.
Lesson Application
Market Horizontal
Penetration Integration
Facebook pre-installs partnerships Mergers and Acquisitions
Market - Coordination with restrictive governments
Development
Product
- develops mobile app
Development
PEPSICO’S GENERIC
STRATEGY (PORTER’S
MODEL)
PepsiCo applies different generic competitive
strategies, considering the company’s wide
array of products. However, the main generic
strategies that contribute to PepsiCo’s
competitive advantage are as follows:
1.Cost leadership
2.Broad differentiation
PEPSICO’S INTENSIVE
STRATEGIES (INTENSIVE
GROWTH STRATEGIES)
PepsiCo implements market penetration as its
primary intensive growth strategy.
This intensive strategy supports business growth
through increased sales, such as from a bigger
market share.
PRODUCT MARKET
DEVELOPMENT DEVELOPMENT
PepsiCo applies market development as
PepsiCo’s secondary intensive growth
its supporting intensive growth strategy.
strategy is product development.
This intensive strategy supports business
This intensive strategy requires growth by capturing new markets or
offering new products to capture more market segments.
consumers.
Strategic Business
Analysis
End of Presentation
