Description of Internal & External Growth Strategies (slides from presentation)

1. Internal
vs.
External
GROWTH STRATEGIES
José L. Giráldez
Customers & Added Value
Provider

2. 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

3. 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:

4. Internal (organic) growth (2/5)

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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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
GiraldezGo
+34 639657973