Asked by Caden DeValle on Jun 18, 2024
Verified
Compare and contrast the different strategies for growth and diversification. Explain the conditions and circumstances in which each of them is best suited.
Growth and Diversification
Strategies that companies employ to increase size, expand product lines, or services, and enter new markets to reduce business risk.
Strategies for Growth
Plans or approaches adopted by a business to increase its size, revenue, market share, or competitive positioning.
- Evaluate and distinguish the assorted strategic management frameworks and their proposals for strategy development.
Verified Answer
GS
Gurminder SinghJun 22, 2024
Final Answer :
Organisations pursue growth strategies to increase in size and expand its current operations. One approach to growth is through concentration, where expansion is within the same business area. Another approach to growth is through diversification, where expansion takes place through the acquisitions of, or investment in, new and sometimes different business areas. A related diversification involves growth by acquiring new businesses or entering business areas that are related to what the organisation already does. Unrelated diversification involves growth by acquiring businesses or entering business areas that are different to what the organisation already does. Diversification can also take the form of vertical integration, where a business seeks added value creation by acquiring suppliers (backward integration) or distributors (forward integration).
A retrenchment strategy involves reducing the scale of current operations. The most extreme retrenchment strategy is liquidation, when operations cease due to the complete sale of assets or the declaration of bankruptcy. A less extreme strategy of retrenchment is to go through a restructuring process, which changes the scale and/or mix of operations to gain efficiency and improve performance. Restructuring is sometimes accomplished by downsizing which decreases the size of operations with the intent to become more streamlines. Restructuring by divesture involves selling off parts of the organisation to refocus on core competencies, cut costs and improve operating efficiency.
A retrenchment strategy involves reducing the scale of current operations. The most extreme retrenchment strategy is liquidation, when operations cease due to the complete sale of assets or the declaration of bankruptcy. A less extreme strategy of retrenchment is to go through a restructuring process, which changes the scale and/or mix of operations to gain efficiency and improve performance. Restructuring is sometimes accomplished by downsizing which decreases the size of operations with the intent to become more streamlines. Restructuring by divesture involves selling off parts of the organisation to refocus on core competencies, cut costs and improve operating efficiency.
Learning Objectives
- Evaluate and distinguish the assorted strategic management frameworks and their proposals for strategy development.
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