intensification strategy is a type of internal growth

Global. Agricultural intensification can be technically defined as an increase in agricultural production per unit of inputs (which may be labour, land, time, fertilizer, seed, feed or cash). Making minor modifications in the existing products that appeal to new segments can do the trick. (d) Results in improved supply of essential materials, components, plants etc. Market penetration basically falls into two areas. Often, in such cases, a business consumes a lot of its resources without borrowing anything from outside to expand its operations and grow the company. Create beneficial content that helps solve customers problems, Utilize thought-provoking content that stimulates and uplifts, Fix a narrative that your customers can relate to, Include the element of surprise to attract the consumers. The decision to enter a foreign market can have a significant impact on a firm. Privacy Policy 9. Takeover is an acquisition of shares carrying voting rights in a company with a view to gaining control over the assets and management of the company. Vertical integration may be either backward integration or forward integration. The firm must have adequate financial, technological and managerial capabilities to expand the way it chooses. The basic classification of intensive growth strategies: These strategies are also called organic growth strategies. An alliance is defined as associations to further the common interests of the members. Such an approach is very useful for enterprises that have not fully exploited the opportunities existing in their current products-market domain. Diversification is defined as the entry of a firm into new lines of activity, through internal or external modes. The major objectives of adopting of growth strategies are - i. Business. Firms choose expansion strategy when their perceptions of resource availability and past financial performance are both high. When your companys website is accurately optimized for SEO, the pages of your website are more likely to be indexed by Google and ranked highly on the search results (as long as the quality of the content is good). A firm is said to follow horizontal integration if it acquires or starts another firm that produce the same type of products with similar production process/marketing practices. GOOD MORNING WELLCOME TO ALL. Protective rights merely allow a co-venturer to protect its interests in the venture in situation where its interests are likely to be adversely affected. The market development can be achieved in any of the following ways: (a) By adding new distribution channels to expand the consumer reach of the product. Given the case, it will be problematic for companies to intensify the corporate size any further. 2. licensing. Lesser risk than external growth (e.g., takeovers), Can be financed through internal funds (e.g., retained profits), Builds on a business assets (e.g., brands, customers), Permits the business to grow at a more practical rate. Cooperative strategy is the third major alternative (internal growth and mergers and acquisitions are the other two) firms . Many companies make the mistake of concentrating too much on clocking new customers to the detriment of keeping their old customers. The firm remains in its present markets but develops new products for these markets. what are the 4 external growth strategies a firm can chose? The capability to uphold corporate culture: There will be no problems related to principles clashes that might get to your feet in acquisition environments. Before selecting diversification strategy, one must have a clear understanding of the new product/service, the technology and the markets. Market development options include the pursuit of additional market segments or geographical regions. This strategy involves introducing present products or services into new geographic areas. In the case of intensification strategy, the firm pursues growth within the existing businesses. For smooth functioning of an alliance, partners are required to have preset priorities and expectations from each other. Diversification Growth Strategy. However, if effective, it can result in some of the utmost heights of internal growth. Intensification strategy is followed when adequate growth opportunities exist in the firms current products-market space. It is common for a firm to begin with exporting, progress to licensing, then to franchising finally leading to direct investment. By partnering you with the processes and insight youre missing and the people whove been through it all before. Internal. Answer: Intensification strategy is a internal and external type of growth. It occurs when the company decides to collaborate with another organization to achieve its objectives. All these require heavy investment, which only firms with substantial resources, can afford. . : Market penetration strategy strives to increase the sale of the current products in the current markets. The merged concerns go out of existence and their assets and liabilities are taken over by the acquiring company. Because the firm is expanding into a new market, a market development strategy typically has more risk than a market penetration strategy. Acquirer makes a direct offer to the shareholders of the target company without the prior consent of the existing promoter/management. Facebook is ubiquitous today, but when it . GROWTH /EXPANSATION STRATEGY MEANING:- The growth strategy is called as expansion strategy .To achieve higher targets than before ,a firm may enter into new market, introduce new product lines, serve additional market segments, and so on . (a) Expand sales through developing new products. Many companies endeavour to maintain/increase sales through continuous feature improvements/introduction of new products. The development of new markets for the product may be a good strategy if the firms core competencies are related more to the specific product than to its experience with a specific market segment or when new markets offer better growth prospects compared to the existing ones. Copyright 10. Advantages of internal growth strategies. ~provides maximum control. For example, lets say youre endorsing a new product you have launched recently on your website. 4. franchising. 11 External Growth Strategies For Businesses. Once you have figured out your customers needs, you need to tailor your CTAs accordingly, and you will be able to crack the deals. In contrast to the intensive growth, integration strategy involves expanding externally by combining with other firms. A growth strategy is one that an enterprise pursues when it increases its level of objectives upward, much higher than an exploration of its past achievement level. Advantages and Disadvantages of Organizational Change, Role of Information Technology (IT) in the Banking Sector, Elton Mayos Hawthorne Experiment and Its Contributions to Management, How To Assess the Financial Health of a Company, Role of Information System in Business Process Reengineering (BPR), The Engel Kollat Blackwell Model of Consumer Behavior, Traditional Management Model vs. Modern Management Model. In addition, allocation of decision-making powers to executives (reducing control of original owners) might occur. Growing internally or externally helps you accomplish the same objective of increasing a companys profit, market share, and size. Exploration is key and the driver of a more effective strategy and more efficient and effective marketing. There are broadly two types of integrative growth: i. 6. In a tender offer, one firm offers to buy the outstanding stock of the other firm at a specific price and communicates this offer in advertisements and mailings to stockholders. Essentially, you are using all the existing resources your business has to grow your business exponentially. Faster. To reach out to additional customers in your companys current market share, its best to take the time to launch a thorough marketing strategy that uses both digital and traditional means of customer association. The firm try to increase market share for present products in current markets through increase of marketing efforts like increase of sales promotion and advertising expenditure, appointment of skilled sales force, proper customer support and after sales service etc. (b) Create different quality versions of the product. This strategy seeks to enhance the long-term competitive advantage of the firm by forming alliances with its competitors existing or potential in critical areas instead of competing with others. Your pages will perform better and rank higher up on Googles SERP (search engine results page). However, market penetration has limits, and once the market approaches saturation another strategy must be pursued if the firm is to continue to grow. This will increase a companys size, profits, and customer base. (c) Convert non-users of a product into users of the product and making potential opportunity for increasing sales. However, using only internal means to grow a company means growing at a very measured and organized pace. Growth Strategy is pursued to reduce the cost of production per unit. Such growth may be possible via mergers, takeovers, joint ventures, strategic alliances etc. From a practical standpoint, however, most tender offers eventually become mergers, if the acquiring firm is successful in gaining control of the target firm. But it can be broadly categorized into three: The operation of some joint ventures involves the use of the assets and other resources of the venturers rather than the establishment of a corporation, partnership or other entity or a financial structure that is separate from the venturers themselves. Attractive product design, high product quality, attractive prices, stronger advertising, and wider distribution can assist an enterprise in gaining lead over its competitors. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This site uses Akismet to reduce spam. Since mergers and consolidations involve the combination of two or more companies into a single company, the term merger is commonly used to refer to both forms of external growth. Joint ventures with multinational companies contribute to the expansion of production capacity, transfer of technology and capital and above all penetrating into global market. Occasionally, shareholders might favor inorganic growth because it proposes swift growth to kick its share price. Plagiarism Prevention 5. If you aim to replicate their success and expand your business globally, then learning from their example will provide valuable insights. For example- a cement manufacturing company undertakes the civil construction activity; it will be a case of diversification with forward linkage. External growth is an alternative to internal (organic) growth. The element of willingness on the part of the buyer and seller distinguishes an acquisition from a takeover. But in practice, however effective control maybe exercised with a smaller shareholding, because the remaining shareholders scattered and ill-organized are not likely to challenge the control of acquirer. A licensing agreement is a commercial contract whereby the licenser gives something of value to the licensee in exchange of certain performance and payments. Less number of players in the industry will lead to collusion to reap abnormal profits by setting price of finished products at higher level than the market determined price. If the new lines added make use of the firms existing technology, production facilities or distribution channels or it amounts to backward or forward integration, it may be regarded as related diversification. Joint venture may give protective or participating rights to the parties to the venture. before, a firm may enter into new markets, introduce new product lines, serve additional. A merger refers to a combination of two or more companies into a single company. Your competition will also go down tremendously. (c) By entering new geographical markets. Examples of horizontal integration includes acquisition of Universal Luggages (Aristocrat) by Bioplast (V.I.P.) These takeovers are also referred to as violent takeovers. if it does not then new entrants will be there in the market and its . Anyway, its a great exercise to follow for team building. The most significant progress has been observed in desalination where substantial reduction in overall energy demand, environmental footprint, and process . Entering into a Joint venture is a part of strategic business policy, to diversity and enter into new markets, acquire finance, technology, patent and, Types of Growth Strategies Top 5 Types: Concentration Expansion Strategy, Integration Expansion Strategy, Diversification Expansion Strategy and a Few Others, Type # 1. The ways in which controlling interest can be attained are discussed below: In a friendly takeover, the acquirer will purchase the controlling shares after thorough negotiations and agreement with the seller. Thus, the proficiency of your facilities, assets, the new and even existing product, and what potential new grounds could be focused on with your current strategy are all carefully examined. While doing so, they develop rapidly and leave their competition biting the dust. A company may pursue either or both internal or external growth strategies. market segments, substantial increase in market share and/or increase in sales targets. If the willingness is absent, it is known as takeover. Some joint ventures involve the joint control, and often the joint ownership, by the venturers of one or more assets contributed to, or acquired for the purpose of, the joint venture and dedicated to the purposes of the joint venture. Intensification Strategy Checklist. Diversification strategies are becoming less popular as organizations are finding it more difficult to manage diverse business activities. The firm expands forward in the direction of the ultimate consumer. Another one of the best low-cost internal growth strategies is to increase your companys current market share. The most suitable may be derived only after all the variables have been considered. However, internal and external growth should not be considered opposites. (b) Putting an end to practice of price cutting. Some companies expand the business into unrelated industries (. Locating call-to-action buttons on your website shouldnt be a scavenger hunt. Integration Expansion Strategy 5. Often, market development and product development strategies facilitate better market penetration. vertical integration with backward and forward linkages. When bifurcating to other customers, do your study thoroughly and ensure there is a market and opportunity to capture. A major contributor to the growth of Reliance Industries in the early stages was backward and forward integration. Focusing your marketing efforts on different demographics allows you to include a new group of people in your current geographic reach. Strategic alliance is an arrangement or agreement under which two or more firms cooperate in order to achieve certain commercial objectives. The company can create different or improved versions of the currents products. It is also used in determining whether it is wise or unwise to keep to the existing market for the present products or move out and expand into another. How do we do that? External growth is also known as inorganic growth. It doesnt involve a lot of research and development. Your email address will not be published. The company can expand sales through developing new products. By organically growing, you have the more controlled evolution and still have a substantial market share to win. Advertisement Advertisement New questions in Economy. Typical schemes used for this purpose are volume discounts, bonus cards, price promotion, heavy advertising, regular publicity, wider distribution and obviously through retention of customers by means of an effective customer relationship management.

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