Business Growth Strategies

STAGES OF BUSINESS GROWTH

Stages of Business Growth

• Start up
– Define product and market niche
– Create your business model
– Prepare your business plan. Build management team
– Protect your competitive advantage
– Raise capital
– Create your brand, produce and differentiate your products
• Initial Growth
– Capture market share, launch differentiated product
– Gain repeat customers, expand channels and revenues
– Expand management team, train employees
– Start inventing your second stage of growth
Stages of Business Growth

• Rapid Growth
– Reinvent product and competitive strategies
– Cultivate leaders, empower employees
– Broaden lines, expand territories
– Inject relentless growth attitudes in your people
• Continuous Growth
– Build a balanced business system
– Keep reinventing your growth strategies
– Establish a responsive innovation system
– Develop Capability for Flexibility and speed
PRODUCT LIFE CYCLE
Introduction

• Market size and growth is slight.

• Marketing costs may be high
• Distribution is selective.
• Profit is not likely.
Growth

• Characterised by rapid growth in

sales and profits.
• Profits arise due to an increase in
output (economies of scale)and
possibly better prices.
• It is cheaper for businesses to
invest in increasing their market
share
• Increase in distribution channel as
demand increase.
Maturity

• Competition is most intense as

companies fight to maintain their
market share.
• Both marketing and finance become
key activities.
• The most profit is earned by the
industry as a whole.
• Distribution channel becomes intense
• Research pours into product
modification and improvement and
perhaps to improve production
efficiency and quality.
Decline

• Market is shrinking, reducing the

overall amount of profit that can
be shared amongst the remaining
competitors.
• Newer and better products are
available
• There should be a plan to exit the
market if not profitable anymore
BUSINESS GROWTH STRATEGIES
Growth Strategies

• Market Penetration.
– The least risky growth strategy for any business is to simply sell more
of its current product to its current customer.
• New Products for existing customers
– it involves developing new products to sell to your existing customers
as well as to new ones.
• New Products for New Customers.
– Sometimes, market conditions dictate that you must create new products for
new customers, eg Toyota and Lexus
• Alternative Channels.
– This growth strategy involves pursuing customers in a different way such as,
for example, selling your products online.
Growth Strategies

• Diversification
– This is when you decide to be a part of many unrelated businesses. The
Dangote group is an example with investments in noodles, transport,
cement, etc same with the Honeywell Group with Investments in Oil and
Gas, Flour Mills. Noodles production, Real Estate etc
• Integrative Growth Strategies
– Every market structure has Value chain( suppliers), Competitors – Large and
Small and those who provide value add to their products. Eg will be
software for PCs, ring tones to telecoms.
– What is a value chain------
– What is value add
– One may seek growth by either building partnership and Alliances with
some of the other players in the industry, or pure merge or acquire them
Growth Strategies
• Horizontal Integration
– This growth strategy would involve buying a competing business or
businesses.
– A variation of this is Acquisition, where one company acquires the other and
Mergers where two equals agree to go together.
• Backward Integration
– A backward integrative growth strategy would involve buying one of your
suppliers as a way to better control your supply chain.
– Doing so could help you to develop new products faster and potentially more
cheaply.
– It could help reduce your cost.
• Forward Integration
– Acquisitions can also be focused on buying component
companies that are part of your distribution chain
FOOD FOR THOUGHT
Food for thoughts

• What are the Market Trends?

• What do they suggest?
• What is the product lifecycle of the market?
• What is the market size?
• How many competitors?
• What is our market share?
• What is our stage of business growth?
Final Words

What three things should we do to increase our

market share, sales and profits?
Femi Olaiya
femi@redwdood-consulting.com
www.redwood-consulting.com