Growth strategy is a tactical plan devised and executed for the purpose of business expansion. Growth strategies should be part and parcel of every business whether small or big.
Expansion strategies are specifically essential for small business ventures which get easily influenced even by the slightest alterations in the market. Changes in the customers, price and competition can negatively affect the growth of any business.
Having a strategic plan of growth provides a sense of direction for a business and helps a lot in the minimization of the effects of market place changes (Sabharwal, n.d).
This paper compares and contrasts different growth strategies and key fundamentals that should be considered before embarking on an important strategy of growth and wealth building.
Every organization has the responsibility of formulating its specific expansion strategy according to its own uniqueness in order to function more competitively. The main growth strategies include expansion, diversification and modernization.
Expansion entails escalation of the market share and increasing profits and sales returns of present products and services. This can be successfully done through increased production of existing products and services so as to satisfy a larger market hence increase in sales and profit.
The expansion strategy is beneficial especially for those businesses that have a smaller share in the market (Sabharwal, n.d).
Besides expansion, diversification is a good growth strategy which involves the development of fresh products and services for fresh markets. It reaches a point where a business can no longer expand its existing products and services.
Therefore, for the purpose of increasing sales, the business should opt for diversification as a growth strategy. Moreover, diversification is not only about changing the outlook of a product or service but also adding completely different products and services.
It is evident that there is a major difference between expansion and diversification. Expansion involves an increase in the production and sales of existing products while diversification entails the addition of entirely fresh products and fresh markets.
A business can also use modernization as a strategy to realize growth. Modernization involves the improvement of technology to intensify production, enrich value and to trim down wastage and production expenses.
The dilapidated and old-fashioned machines and equipment are exchanged with recent ones in order to guarantee efficiency and effectiveness. Moreover, modernization enables a business to become more competitive and enhances acquisition of up to date skills by employees.
In addition, modernization enhances growth by ensuring that the profitability of a business is increased because of heightened efficiency and minimized wastage (Sabharwal, n.d).
There are key fundamentals that should be considered in any business before embarking on the important strategy of growth.
They fundamentals include the people that make up the business, the purpose for operating the business, the business processes that are undertaken to fulfill the purpose, the physical resources required to accomplish the processes and the customer who is willing to buy the products and services of a business.
All these factors should be considered in order to determine the success of any growth strategy (McKaskill, 2010).
Conclusion
Every business should have a strategic action plan for the purpose of achieving a competitive advantage and to acquire a good share in the market. Therefore, growth strategies should be included in future plans of a business in order to enhance efficiency.
A business without a growth strategy will be unable to survive in the market in this technological era. Businesses always choose their growth strategies depending on their individual needs.
For instance, a business that faces the risk of its products becoming obsolete should opt for diversification as a way out. It is evident from the research that there are key aspects that should be in place in order to ensure a successful implementation of a growth strategy.
The aspects which include the people, the resources and the customers work hand in hand in ensuring the survival and success of any business venture.
Reference List
McKaskill, T. (2010). Ultimate Growth Strategies. Web.
Sabharwal, S. (n.d). Alternative Growth Strategies for Small Business. Web.