1 / 24

Growth and Diversification Strategies

Kyle Hersey, Stefan Dimitrov , Kasey Darling, Lauren D’Amato & Khaleel Jhungeer. Growth and Diversification Strategies. Growth. Growth strategies are used to increase and expand a company’s operations Growth is often necessary for the long-term survival of thriving companies. Strategies.

yuki
Download Presentation

Growth and Diversification Strategies

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Kyle Hersey, Stefan Dimitrov, Kasey Darling, Lauren D’Amato & KhaleelJhungeer Growth and Diversification Strategies

  2. Growth • Growth strategies are used to increase and expand a company’s operations • Growth is often necessary for the long-term survival of thriving companies

  3. Strategies • Concentration • Diversification • Vertical Integration

  4. Concentration • Involves growth by expanding existing businesses • Focuses efforts towards a single market

  5. Concentrated Companies • McDonalds, Wal-Mart and Starbucks • All growing by concentrating on their primary business areas and domestic expansion

  6. Example McDonald’s locations by country

  7. Advantages • Reduces resources needed to increase market share • Low risk in growing markets • Allows companies to specialize in specific markets • Less change and easier decision making

  8. Disadvantages • Limited domestic growth • Can be high risk as you are putting all your eggs in one basket • Very dependant on domestic economy

  9. Diversification • Involves adding products, services, locations, customers, and markets to your company’s portfolio • Allows companies to reach new audiences

  10. Types of Diversification • Concentric – new venture strategically related to existing business • Conglomerate – new venture that has no strategic fit or relationship with existing business

  11. Concentric Diversification • Coca-Cola’s acquisition of Minute Maid

  12. Conglomerate Diversification • Nestlé’s acquisition of Georgio Armani

  13. Advantages • Control of inputs leading to continuity • Provides better risk control • Provides movement away from declining activities • Take advantage of existing expertise • Reach new markets

  14. Disadvantages • May result in slowed growth in its core business • Adding management costs • Losses may be incurred during market consolidation • Cross-nation diversification may be met with varying, political and legal, requirements.

  15. Vertical Integration • Form of diversification • Involves growth by acquiring companies up or down the supply chain • Backwards, Forwards or Balanced

  16. Backwards Vertical Integration • Acquiring suppliers Tire Company Glass Company Metal Company

  17. Forward Vertical Integration • Acquiring distributors Bottler Coke Machines

  18. Balanced Vertical Integration • Acquiring distributors & suppliers Production Design Distribution Advertising Retail Stores

  19. Advantages • Lower transactional costs • Synchronization of Supply & Demand • Quality assurance • Strategic Independence

  20. Disadvantages • Higher coordination costs • Monopolization of markets • Higher costs when switching suppliers/ buyers

  21. Lets Review

  22. Concentration • Growth by focusing on expanding a primary business in a single market • Can involve international expansion but mostly concentrated on domestic

  23. Diversity • Growth by expanding the markets, products, locations or services a company offers • Concentric: acquiring related companies • Conglomerate: acquiring unrelated companies

  24. Vertical Integration • Growth by acquiring companies backwards or forwards in the supply chain • Forwards: acquire distributors • Backwards: acquire suppliers

More Related