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Chapter 13: Strategies For Growth and Managing The Implications of Growth

This document discusses strategies for business growth and managing the implications of growth. It outlines four main growth strategies: 1) penetration strategy, 2) market development strategy, 3) product development strategy, and 4) diversification strategy. It also discusses the financial, human resource, and management pressures that growth can create for a firm and provides recommendations for overcoming these pressures through effective financial management, hiring practices, communication, training, and prioritizing time. Finally, it categorizes firms based on their actual and potential for growth.

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Lina Marcela Alzate
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47 views23 pages

Chapter 13: Strategies For Growth and Managing The Implications of Growth

This document discusses strategies for business growth and managing the implications of growth. It outlines four main growth strategies: 1) penetration strategy, 2) market development strategy, 3) product development strategy, and 4) diversification strategy. It also discusses the financial, human resource, and management pressures that growth can create for a firm and provides recommendations for overcoming these pressures through effective financial management, hiring practices, communication, training, and prioritizing time. Finally, it categorizes firms based on their actual and potential for growth.

Uploaded by

Lina Marcela Alzate
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Chapter 13: Strategies for Growth

and managing the Implications of


Growth

Prepare by:
Nelson Delgado
Romy Reyes
Ariana Fernandez
Zakary Laporte
Jamella Gordon

BUS 536 Entrepreneurship


Dr. Paul D. Maxwell
Growth Strategies
Where To Look For Growth Opportunities
A successful Strategy provides the opportunity for

the entrepreneur to grow his or her business

• Different combinations of Growth Strategies


1) Penetration Strategy

2) Market Development Strategy

3) Product Development Strategy

4) Diversification Strategy
Penetration Strategy

• A Strategy to grow by encouraging existing


customers to buy more of the company’s current
products
Market Development Strategy
• A Strategy to grow by selling the company’s
existing products to new groups of customers

• A new group of customers can be identify in


their relationship to a specific Geographic's or
Demographics

• The use of the existing product in a NEW


WAY
Product Development Strategy
• A Strategy to grow by developing and selling
new products to people who are already buying
the company’s existing products

• By building on a company’s existing products in


which the customer may have problems with the
products current use, is an important resource in
coming up with a NEW LINE of products
Diversification Strategy
• A Strategy to grow by selling a new product to a
new market

• An example would be, bundling an existing


product with a new product to be sold together,
such as computer hardware and new software
thus creating a new market
Implications Of Growth For the Firm

Pressures on Existing Financial Resources


• Growth need cash
• Firm’s own resources become stretched thin
• More risks in company
Pressures on Human Resources
• Employee turnover
• Negative impact on firm’s corporate cultures
Cont.
• Pressure on Management of employees

• Change in management style


• Management decision making

• Pressures on the Entrepreneur’s time

• Most precious but limited resources


• Growth needs time
Overcoming Pressures on existing
Financial Recourses
• The entrepreneur could acquire new resources
• The acquisition of new resources is expensive in
terms of the equity sold or the interest payments
from debt
• Applying effective financial control
• Managing inventory
• Maintaining good records
• Managing Cash Flow

• Managing Inventory

• Managing Fixed Assets

• Managing Costs and Profits

• Taxes
Managing Cash Flow
Managing Inventory

• Too much inventory can drain on cash flow

• Too little inventory won’t meet customers demands

• Growing business typically tie up more CASH in their inventory than in any
other part of the business

• Electronic Data Interchanges (EDIs) helps link the needs of a retailer with
the wholesaler and producer which allows for a fast order entry and
response

• This EDI system also allows businesses to track shipments internationally


• EDI Video
Managing Fixed Assets
CVP ANALYSYS
Monthly profit Company A Company B
__________________________________________
(1) $10,000 $300,000,000
(2) $10,400 $200,900,000
(3) $10,800 $200,850,000
(4) $10,000 $200,600,000
Impact of a business grow on
financial statements

• Managing Costs an profits

• Managing the budget

• Managing record keeping


a. customers record
b. financial records
Managing pressures on
existing human resources
• Permanent employees

• Part time employees

• Efficient hiring procedure

• Hiring the right employee for the right job

• Employee evaluation process


Defeating pressures on existing
human resources
• Involves others in decision making process

• Specify highly qualify managers and employees

• Create a motivation system

• Establish a team spirit

• Communicate with employees

• Provide continuous training for employees


Overcoming pressures on the
management of employees

• Provide feedback

• Delegate some responsibility to others

• Provide continuous training for employees


Overcoming pressures on the
entrepreneurs time
• Increased productivity

• Increased job satisfaction

• Improved interpersonal relationships

• Reduce time anxiety and tension

• Better health
• Principle of desire

• Principle of effectiveness

• Principle of analysis

• Principle of teamwork

• Principle of prioritized planning

• Principle of reanalysis
A categorization of
entrepreneurs and their firm’s
growth
• Actual growth of the firm

• Unused potential for growth

• Constrained growth

• Little potential for firm growth

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