Internal vs.

External

GROW TH STRATEG IES

José L. Giráldez Customers & Added Value

Provider

Shake well before using…

• Why?

• Who?

• Resources?

• Products/Services?

• How?

• Where?

• Advantages vs. Disadvantages…

It is (without any kind of doubt) proved and confirmed that

a lot of firms step into a growth strategy

without enough (if any) planning or deep thinking

that could alllow them to have any possibility to be successful

Internal (organic) growth (1/5)

• Especially prevalent during the early stage of a firm

• When new markets are built and products are being developed

• It is slower that innorganic growth

• It is easier than to integrate something external

• acquiring new customers and icreasing the sales of existing products/services

• introducing new products/services

• moving into new geograhpical markets

• diversification to completely different businesses

Can be achieved by:

Internal (organic) growth (2/5)

Internal (organic) growth (3/5)

A- Market Penetration Strategy

• Consolidate and stabilize position

• Leverage the existing resources and capabilities

• Penetrate the current market

• ie: Pepsi steals part of Coke’s market share

B- Product Development Strategy

• On existing competencies (Markets)

• On new competencies (Products)

• Higher risk than Market Penetration

• ie: Toyota comes up with a new car

• New segments, territories, and uses

• Good strategy if core competencies are product related

• Higher risk strategy than Market Penetration

• ie: Zara launches in India

C- Market Development Strategy

Internal (organic) growth (4/5)

D- Diversification Strategy

• Beyond current expectations

• Both products and markets development lie outside

the firm’s core competencies

• Riskier than strategies A, B, or C

• Might, however, reduce overall business portfolio risk

• ie: TGI fridays sells new products in new markets

Internal (organic) growth (5/5)

Product related horizontal diversification

• Strategy is based on BRAND LOYALTY

• ie: Montblanc pen & Sun Glasses

Process/technology related (concentric) diversification

• Strategy is based on PRODUCT CATEGORIZATION

• ie: BOSCH and its selection of household appliances

Unrelated (conglomerate) diversification

• Strategy is based on a product portfolio that is

as broad as possible

• ie: VIRGIN group

External (international) growth (1/5)

• Shouldn’t be planned as a “SEASONAL ACTIVITY”

• It helps to diversificate risks

• It requires new competencies and investments

• Slow process

External (international) growth (2/5)

• It is in high need for global integration for the sake of lowering costs

• Favors efficiency over responsiveness to local requirements

• ie1: MICROSOFT is offering the same software around the world

• ie2: P&G seeks to create a uniform global brand

Global Startegy

External (international) growth (3/5)

• It is in high need for local adaptation, but has only a minimal pressure to lower costs

• This strategy sacrifices efficiency for the sake of responsiveness to local requirements

• ie1: customization of MTV’s programming around around the world

• ie2: NIVEA customizes its products to local preferences

Localization Startegy

External (international) growth (4/5)

• It is in high need for both local adaptation and global integration

• We are talking about the middleground between a Global and a Localization strategy

• ie1: McDonald’s (Mc Café in EUROPE)

Transnational Startegy

External (international) growth (5/5)

• It is neither in need for local adaptation nor does it requires to adapt to pressures to

lower costs

• Known as EXPORT STRATEGY

• ie1: Export of national specialities: Food, Clothing, …

International Startegy

Some of the graphics come from public documents or web sites, and have been used with the sole intention of

delivering the messsage There are no commercial purposes behind this document

José L. Giráldez Hunter of Customers

& Added Value provider

jose-madrid.es@googlemail.com

Athos-world

http://es.linkedin.com/pub/jose-l-giraldez/6/a08/0

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+34 639657973