If you are in a market that is itself experiencing strong growth, your business growth may be driven by that market […]. If you are not in this high growth market situation, then you must design and implement a suitable strategy. […] Let’s review a few of these strategies.
#1. Market penetration
You are already in a market that you know very well. You can then expand your customer base or increase your sales to your current customers, or both. To achieve this, you can recruit more salespeople, review your pricing policy, develop communication and promotion actions, etc.
#2. Market development
You will sell your existing products in new markets. You will thus be able to find new geographical areas for your products, a new market segment (include professionals in an offer initially intended for individuals), etc. You must study these new markets beforehand, and perhaps adapt, at least slightly, your products.
You can also create a franchise and the growth will then be through the network of franchisees. At the same time, you must continue to protect your current markets.
#3. Product development
You will develop and market new products in your current market. You must then validate your new idea. These new products may or may not be complementary to your current products. You must avoid cannibalization problems that can be encountered when the new product comes to dethrone and replace the existing products.
You will introduce new products to new markets. This strategy is akin to a whole new entrepreneurial adventure. It could be facilitated by the acquisition of a company already present on the market, or other strategies of advanced partnerships or merger/acquisition that it is more prudent to consider only when the company created is sustainable.
Growth can be:
> Internal : you choose to develop yourself with your own means. It’s a virtuous circle in which the resources you generate can be reinvested. In addition, you have a mastery of time and development strategy. However, this (organic) growth may be slower with little strategic responsiveness;
> Shared : you choose to develop by joining forces with partners. You reduce risks and costs, and you reinforce each other through the synergies of skills. However, this could lead to coordination difficulties and significant costs in the event of a breakdown;
> External : you choose to develop by buying other companies via mergers (pooling the assets of two companies, joint integration of all or part of the processes) and acquisitions (acquisition of assets and liabilities, takeover of the company target).
Choose the most suitable mode of growth
The SWOT matrix (Strengths-Strengths, Weaknesses-Weaknesses, Opportunities-Opportunities, Threats-Threats) is a strategic analysis tool. It allows, thanks to an internal diagnosis (SW) and external (OT) to have a synthetic vision of the company.
The internal diagnosis concerns all the resources (human, financial, etc.) over which it is possible to exercise real control. Unlike weaknesses (eg a failing cash flow), strengths (eg a very experienced sales team) are the internal factors that give the company an advantage over its competitors.
The external environment includes factors that are outside the business (demographic, economic, technological, consumer, etc.) but which can have a positive or negative impact on it. Opportunities are external situations that can provide a competitive advantage to the company, threats being unfavorable external situations.
Whatever strategy is chosen, it must be in line with your objectives and be the subject of an in-depth analysis, to assess the necessary means, as well as the consequences both internally (organization, human resources) and externally. outside the company (regulatory, etc.).