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