GROWTH STRATEGY

OBJECTIVES OF GROWTH
• business environment like social, economic
and political environment ,changes with
change in time. Inorder to survive in the
changed and changing business environment,
a business enterprise needs to be strong
enough to cope with the changes and
challenges before it. The same underlines the
need for growth of business enterprises.
 NEED FOR GROWTH
• In simple terms, growth implies strength and stamina.
• Increase in sales turn over and output , interalia have
been the major symptoms of a growing business.
• The need for appropriate technology also changes with
changes in business environment.
• A big business enjoys more benefits in several matters
than a small one.
• The entrepreneurs desire to do something specific in
business also leads to growth in business.
 STAGES OF GROWTH
• Start up stage

• Growth stage

• Expansion stage

• Maturity stage

• Decline stage
 TYPES OF GROWTH STRATEGY
• Internal growth strategy
• External growth strategy
 INTERNAL GROWTH STRATEGY
• These imply that enterprises grow their own
without joining hands with other enterprise
 EXTERNAL GROWTH STRATEGY
• What is not internal growth strategy is
external growth strategy. in case of external
growth strategy, enterprise grow by joining
hands with other enterprises.
• In this way the main strategies of growth can
be listed as follows….
 Expansion
 Diversification
 Joint Venture
 Merger
 Sub-contracting
 Franchising
 EXPANSION
• Expansion is one of the forms of internal
growth of business. It means enlargement or
increase in the same line of activity.

• In case of expansion the enterprise grows its

own without joining hands with any other
enterprise.
• There are 3 common forms of business
expansion:-
 Expansion through market penetration
 Expansion through market development
 Expansion through product development
and /or modification.
 ADVANTAGES
• Growth through expansion in natural and
gradual.
• Enterprise grows without making major changes
in its organisation structure.
• Expansion makes possible the effective
utilisation of existing resourses of an enterprise.
• Gradual growth of enterprise becomes easily
manageable by the enterprise.
• Expansion results in economies of large scale
operations.
 DISADVANTAGES
• Growth being gradual is time consuming.
• Expansion in the same line of product delimits
enterprise growth making enterprise unable
to take advantages from new business
opportunities.
• The use of modern technology is limited due
to the limited resourses at the disposal of
enterprise. It weakens the competitive
strength of the enterprise.
 DIVERSIFICATION
• Diversification is the another form of internal
growth of business. It is not always possible
for a business to grow beyond a certain point
market penetration.
• Diversification may be defined as a process
of adding more products/market/services to
the existing one.
 ADVANTAGES
• Effective use of resources
• Minimise risk involved in the business.
• Adds competitive strength to the business.
• Enables an enterprise to tide over business
fluctuations and thus ensures smooth running
of the business.
DISADVANTAGES