Wednesday, October 10, 2007

Growth Strategy

Description Growth Strategy Tools focus resources on seizing opportunities for profitable growth. Evidence suggests that profit grown through increasing revenues can boost stock price 25 to 100 percent higher than profit grown by reducing costs. Growth Strategy Tools assert that profitable growth is the result of more than good luck—it can be actively targeted and managed. Growth Strategy Tools alter a company's goals and business processes to challenge conventional wisdom, identify emerging trends, and build or acquire profitable new businesses adjacent to the core business. In some cases these strategies involve redefining the core. They typically require increased R&D investments, reallocation of resources, greater emphasis on recruiting and retaining extraordinary employees, additional incentives for innovation, and greater risk tolerance.Methodology Growth Strategies search for expansion opportunities through: Internal ("organic") growth, including:
Greater share of the profit pool for existing products and services in existing markets and channels;
New products and services;
New markets and channels;
Increased customer retention. External growth (through alliances and acquisitions):
In existing products, services, markets and channels;
In adjacent businesses surrounding the core;
In noncore businesses. Successful implementation of Growth Strategies requires managers to:
Communicate the importance of growth;
Strengthen the creation and circulation of new ideas;
Screen and nurture profitable ventures effectively;
Create capabilities that will differentiate the company in the marketplace of the future. Common uses Managers employ Growth Strategy Tools to improve both the strategic and financial performance of a business. By strengthening and expanding the company's market position, Growth Strategy Tools improve both top-line and bottom-line results. Growth Strategy Tools also may be used to counteract (or avoid) the adverse effects of repeated downsizing and cost-cutting programs.

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