Growth Strategies

 There are five types of expansion (Growth)

strategies
 Expansion through concentration
 Expansion through integration
 Expansion through diversification
 Expansion through cooperation
DIVERSIFICATION IN THE CONTEXT OF
GROWTH STRATEGIES
 Diversification is a form of growth strategy.

 Many organizations pursue one or more types

of growth strategies. One of the primary
reasons is the view held by many investors
and executives that "bigger is better."
DIFFERENT TYPES GROWTH STARTEGIES

Growth Vertical
Conglomerate International
startegies Integration

Concentration Diversification

Backward Forward Concentric

DIVERSIFICATION AND INTEGRATION
STRATEGIES

1. Vertical Integration
-make new products to serve its own needs
-backward/forward integration.

2. Horizontal Integration
-Same product -more customer group
-merger similar companies
Spartek Ceramics takeover of Neyveli Ceramics
DIVERSIFICATION AND INTEGRATION STRATEGIES

3. Concentric diversification
•Marketing & technology related -rain coat
manufacturer -rubber based items -gloves, shoes
•Technology related-leasing company -hire purchase
•Marketing related -Unrelated technology (cosmetic
& sewing machines -women)

4. Conglomerate diversification
-Unrelated to customer groups, function, technology
ITC -Cigarette & Hotel
TTK group -Chemicals, hosiery, contraceptives
DIVERSIFICATION: GROW OR BUY?

 Diversification efforts may be either internal

or external.

 Internal diversification
when a firm enters a different, but usually
related, line of business by developing the
new line of business itself.

Internal diversification frequently involves

expanding a firm's product or market base.
External diversification
 External diversification may achieve the same
result; however, the company enters a new
area of business by purchasing another
company or business unit.

 Mergers and acquisitions are common forms

of external diversification.
Expansion through Cooperation

 Mergers
 Takeovers
 Joint ventures
 Strategic alliances