What strategies have proven successful in the growth of Small and Medium Enterprises (SMEs) into larger firms and which have been shown to fail?
Various strategies have been developed and deployed with a sole purpose of achieving success for small and medium enterprises commonly referred to as SMEs in most economies.
This is so because SMEs are generally known for developing into larger firms later on which in the end have got various impacts on an economy which are both positive and negative (Aldrich and Zimmer, 1986). This therefore form mean that for any SME to be successful strategies must come and they should incorporate increase in competitiveness of SMEs and realisation of the goals defined.
Further, these strategies must define the roles of a government and specifically the local governments since majority of small and medium enterprises operate locally. Governments are greatly involved in the success of SMEs, because they are directly involved in stimulating SMEs by providing favorable environment for businesses and the legal framework that SMEs adhere to. Therefore, government assistance to SMEs is of great interest.
Some of the strategies that have proven to be successful for SMEs are:
Improving the business climate through assessment of new rules so as to evaluate impacts, and majorly reduce administrative barriers for their existence;
Strengthening and improving financial support through easy access to loans and grants; this strategy aims at tackling the expensive bank product such as interest rates and how the products can be easily accessed without difficulties;
Promoting entrepreneurship and SME competitiveness. This can be achieved through development of necessary institutions to offer support needed. It can also be done through providing consulting services which aim at issuing out of the necessary information to entrepreneurs;
Supporting business starters is another strategy which promotes success. This can be through strengthening of the infrastructure of SMEs, improving financial access and offering quality non-financial support (Bort, 2012).
SMEs are important to any economy. This is because they play a major role in poverty alleviation. In Thailand, for example, SMEs make up to 98% of all establishments of the Thai Economy with small enterprises making up to 76% and the remaining percentage contributed by the medium enterprises (Chuthamas, et al, 2011). In addition, the percentage of those employed by these enterprises stand at 39.8%. This therefore makes the sense that small and medium enterprises are important when it comes to poverty eradication.
Enterprises success are also based on certain factors which are entrenched in the four strategic outline, these are financial support strategy and the innovations it puts on the markets. Specifically, if an enterprise can support itself without depending on other sources of finance the better, this is because the debt load will be lowered.
Enterprises that have successfully grown because of this are Adobe Systems Incorporated and Motorola which are both ICT firms. Motorola, for instance, with its market capital value at $14billion and with its new product waiting for launch the Windows 8 tablet and other Android devices.
This shows how financially the firm is self-reliant and implementing the innovation strategy of launching new products. The same applies to Adobe Systems Inc., which is investing so much in innovation and planning to launch a new product the Photoshop Touch application for handheld devices, and with its market value at $16billion the firm is well off to face the markets.
SMEs are affected directly by tough economic times in their entire lifetime; this means that the output is seriously affected and in most cases negative results are incurred. Access to finance is believed to be the major cause of their failures accompanied by poor management. Constraint access to finances and poor management may prove that financial support to SMEs is way below the par. An example to illustrate this is well put by two firms which are Global Manufacturing Company (GMC) and Opes Prime.
GMC a company dealing with manufacturing suffered a drastic drop in its sale and experts believe that this was a result of poor management and failure to apply damage control measures and strategies. Further, the companys debt load had risen and access to finances was severely diminished. These eventually set barriers that became difficult to overcome hence the collapse which meant that restructuring the whole company and resurrecting it was close to impossibility (Thomson, 2009).
Opes Prime, a financial services firm, became a victim of poor management which haunts majority of small and medium enterprises. Because of poor management, client debts were not tackled amicably thus resulting in a collapse of the firm. This ended up affecting about one thousand clients. This therefore means that promoting financial support and management of finances is of great interest, thus stimulation of SMEs by use of grants also helps in avoiding collapse.
In summary, small and medium enterprises are of great importance to an economy, and for them to be successful, appropriate strategies must be put in place and applied well so as to ensure success of SMEs and avoid failure.
Thomson, J. (2009). 25 corporate collapses and the lessons learnt. Web.
Aldrich, H., & Zimmer, C. (1986). Entrepreneurship through social network. In D. L. Sexton & R. W. Smilor. (Eds.). The Art and Science of Entrepreneurship. Cambridge: Ballinger Publishing, pp. 3-25.
Chuthamas, C., Aminul, I., Thiyada, K., & Dayang, H. (2011). Factors Affecting Business Success of Small & Medium Enterprises (SMEs) in Thailand, Asian social science, 7(5).
Publicity is an essential part in building a brand image for an athlete. When marketing and promoting a product or an athlete, the amount and type of publicity they receive determines how much market share will be acquired. In their study, Yu, Liu, Lee and Soutar (2018) note that negative publicity does have an impact on public perception of a brand. It is safe to say that publicity can make or break an athlete’s career and brand.
In this day and age we live in, it is essential for athletes to be involved in or have a social media manager in their management team. Having a social media manager and a fitness trainer should go hand in hand for an athlete, both for maintaining their brand health and physical health. Ho Lee and Jung (2018) note that it is essential for a business or an athlete to be involved and manage their publicity in order to safeguard and nourish fans, thus reiterating the importance of an involvement in maintaining a good brand image amongst fans. This supports the fact that negative publicity or positive publicity does have an effect on a brand and the need to manage it.
Applying the Ansoff Matrix to aid in determining a growth strategy for an athlete, I would recommend a penetration strategy that aims at increasing the athletes’ market share within the same market. Other than being a low-risk option to apply, it is also a cheaper and less risky option than developing a new product or launching in a new market. In conclusion, maintaining positive publicity is as essential as being fit and healthy in the career and success of any athlete.
There are many ways of growing a firm and therefore management must consider the optimal option which is in line with its major objectives. The main ways of enhancing sales include market concentration, innovation, penetration and diversification.
This paper will focus on penetration as a growth strategy. For a retail store, it is possible that the local market is already saturated and it becomes necessary to expand to new market. It can be a risky strategy but also worthwhile.
Methods of market penetration
The main methods of penetrating to new markets include:
Export: Exporting can be defined as marketing of goods and services produced in one country into another country. For a retail store dealing with assorted commodities such as designer clothes, exporting overseas is a viable option. It is critical to do a thorough market research before exporting the products overseas.
The retail stores can immediately export its commodities abroad if it receives orders but it will find a promising market if it conducts a market research.
This increases chances of success in the foreign markets. The main advantages of conducting market research is that it can help firm in finding the best place of selling the products, identifying new and emerging trends, comprehending the needs of consumers, finding out new market segments, establishing suitable pricing model for the products, coming up of techniques of overcoming barriers to entry and discovering local and foreign rivals. A
fter conducting a research, it is safe to roll out plans of exporting the products overseas. The main benefit of exporting is that it boosts revenues and profits of the firm from foreign outlets. The main disadvantage is that foreign market can be unpredictable such that any instability, whether economic or political, can severely affect the operations of the stores.
Extra locations: opening up of new stores in other places within the country is another option. So as to minimize expansion expenses, new stores should be strategically stationed with the core and support functions centralized to the head office.
Advertising: Retail stores can conduct a serious and intense advertising campaign in the emerging markets. Television and newspaper adverts can be the most effective means of reaching potential customers. Internet can be used since it widely used by people. In this case, stores can set up a website where it promotes the various products.
One can use mass advertising when the intention is to open many stores. It is crucial to note that when expanding to new markets, people are not aware of the brand.
For mass advertising to be employed, critical number of stores must be established first so as to determine the cost of campaign. Use of catalogues can be effective in acquiring new customers. The firm simply band together with other rivals and produce combined catalogue.
Segmentation: using market survey to discover emerging segments that can utilize the stores. A new store can be opened in an up market place that is experiencing rapid real estate development. This is to cater for new customers who may have high disposable income.
Conclusion
Market penetration as a growth strategy can be fruitful or risky. Whether one chooses exporting, advertising, new locations and segmentation, it will all come down to which option has the least cost and has the most returns.
Cranium firm was a board game making venture made by Microsoft veterans Richard Tait and Whit Alexander. They quit Microsoft and hit the flooded board game industry, which forced them to do an extensive research on all the available games in the industry.
Nevertheless, games like monopoly and scrabble were a fertile ground for these Microsoft veterans since very few people had taken up the business. Cranium laid a very strong foundation through research and distribution strategies, which made it a very successful firm in the gaming industry (Gayatri and Madhav, 2005)
Cranium begun by retail marketing, with its major target being Starbuck coffee stores; however, it never invested much on advertising in the beginning since it would satisfy its targets through the word of mouth.
Even without much advertising, cranium managed to remain at the top of all the other companies in the industry. It later on moved from retail marketing to mass trading in stores like Wal-Mart and Target, and this did not affect its performance (Gayatri and Madhav, 2005). The case of Cranium may be analyzed by answering the following 4 questions.
Would you characterize Cranium as a rapid growth firm? If so, what steps did Cranium take to prudently manage its growth?
Cranium is a very rapidly growing firm whose mission “Clever, High-Quality, Innovative, Friendly, and Fun” has taken it a long way. Its founders Richard Tait and Whit Alexander who were both Microsoft software developers created their original cranium game in mid-1998 and they have managed to be the best board game developers since then.
To manage their growth, the first thing they did after quitting Microsoft was an extensive research on all the available games in the board game industry. Through this research, they identified the fields that were not ventured into, specifically, monopoly and scrabble.
They made their company an industry player through a combination of creativity and systematization where their knowledge on Microsoft and software development was a key role. They were so different from other companies since they broke almost every rule in the game industry.
Their attitude of not complying with the fact that the board game industry was flooded took root with its forward-looking distribution strategy, which stood as a hallmark to its success, and within no time, they started branding, product development and even hiring (Dann, 2010)
When Cranium missed the annual Toy fair in New York in February 1999, they worked hard to come up with an alternative plan, mainly due to its significance in toy industry since it is during this time that most dealers make their procurement in preparation for the year’s Christmas festivities.
“Fortunately, Starbucks had been looking for a game for two years that tied in with its ‘coffee culture”; they therefore got off as the best selling independently produced game (Dann, 2010).
Specifically, the following are the growth strategies that Cranium undertook: Phase 1 specialized in moment engineering whereby they picked on a game with deep emotional fulfillment. The game served the whole family regardless of age giving the participants a chance to shine. Phase two involved formulation of a “game with specific activities, editorial content, tangible componantry, and formal rules” (Dann, 2010).
Phase 3 came to cross check and ensure that they were still working on their mission i.e. “Clever, High-Quality, Innovative, Friendly, and Fun”. Phase 5 was about manufacturing mind meld meaning their products had to be world class. The final phase in Cranium growth strategy was to be able to gather views as took their product to the market since it would help them on correcting their areas of weaknesses.
Prior to its acquisition by Hasbro, Cranium did not acquire any firms itself as part of its growth strategy. Why do you think Cranium avoided this growth alternative? Would mergers and acquisitions be an effective growth strategy for Cranium?
Before Hasbro purchased Cranium in January 2008 (Arneson, 2008), it did not acquire any firms as part of its growth strategy mainly because the aim of its founders, Richard Tait and Whit Alexander was to offer quality products to its customers. If they had ventured in other firms within that short duration of ten years, it would have been hard for them to perfect what they had already started.
According to Cook and Harris report (2010), it seems Cranium had financial crisis by the time it was acquired by Hasbro since it had laid off a fifth of its workers in the previous spring and some of the cash deal was to pay off debts and investors.
Therefore, Cranium could not be in a position to any other firms. It was evident from the report that cranium had a challenge somewhere since they never disclosed most of their information including the value of its debt.
Which one of the growth strategies covered in this chapter do you think represents the most fruitful strategy for Cranium, moving forward? Why?
Among the growth strategies that Cranium undertook, phase one about moment engineering was the most fruitful strategy that enabled the company to move forward very fast. Hasbro was the maker of scramble and monopoly and the second largest toy and game company in the world (Arneson, 2008; Cook and Harris, 2010).
The reason as to why Hasbro acquired Cranium was that they had an ongoing strategy to bring to the market the most innovative games and toys in the world. The founders of cranium also saw Hasbro as a perfect home for Cranium. Reports showed that Craniums purchase price was below its annual revenue, thus, the offer was not bad for Hasbro.
Hasbro also had a newly formed subsidailly, which he wanted to merge with Cranium. Hasbro also considered the fact that Cranium founders Richard Tait and Whit Alexander would stay on for a while to oversee its transition before entering into new ventures (Arneson, 2008; Cook and Harris, 2010).
Why do you think Hasbro acquired Cranium? Are you surprised that Tait and Alexander will be leaving the company? Do you think Cranium will become a more popular or a less popular game now that it is a fully owned subsidiary of Hasbro?
It is a surprise that Richard Tait and Whit Alexander who were the founders of Cranium are selling the company to Hasbros. According to its history, it started very well and was the best selling games and Toy Company. It dominated the board game industry for a long time and it was reported that it was making some annual revenue, thus the reasons behind its acquisition by Hasbros are not convincing.
Cranium may continue being a popular game even after its acquisition by Hasbro regardless of the fact that its founder will leave it entirely to him.
This is because Hasbro has been the second largest game and toy company in the world and will of course employ the strategies, which has brought it that far to Cranium. In addition, the time Craniums founders will invest in Hasbros before they leave will leave much effect to the future of Cranium in Hasbro.
Conclusion
The case study of on Cranium shows clearly that there are so many ventures in the world, of which the most important thing is to be aggressive and careful.
It is so evident that by the time cranium were venturing in to board game industry, it was already flooded, but they did not comply with the traditions and the expectations of the industry. Rather, they laid down strategies on how to venture in to the industry, which turned out to be very successful.
There are many strategies that companies use to enhance organizational growth. Growth is brought about when a company expands its market share either by entering new markets, increasing market share in existing market, creating new products or diversifying the product range.
This in theory is known as the Ansoff Matrix which is a marketing tool used in the development of growth strategies. Other than these strategies, modern companies are looking for easier methods of achieving growth. This is achieved through the use of mergers and acquisitions which enable the purchasing company to gain additional markets and product range without individually altering their product or market strategies.
IBM acquired Mainspring in 2001 while Oracle acquired PeopleSoft in 2004 (Hitt, Ireland and Hoskisson, 2011). Growth through mergers and acquisitions is a delicate strategy which can easily fail if approached without considering factors such as cultural diversity, employee conflict and consumer perceptions.
The Ansoff Matrix explains four options that companies have when pursuing growth (Ray, 2010). They can either approach the challenge by focusing on the product aspect or the market. The options available include creating a new product/ market or developing the existing market/ product range. When applying this theory, a company can create a new product and use it to increase its existing market share.
This is called product diversification which involves creation of differentiated/ new products so as to appeal to a different customer segment. The same company can also use the existing products to enter into new markets which have not been tapped or flooded by competitor goods. With focus on the market, the company can increase market share either by entering new markets or through market penetration which involves the use of aggressive marketing techniques to increase sales in the existing market.
Market penetration approach was used by Intel when the company made one the most remembered come backs in the business world. Intel was facing the risk of collapse due to excessive competition and difficulty of consumers to differentiate Intel products from those of competitors. Instead of giving in to obliteration due to these factors, Intel went back to the drawing board and decided to use marketing strategies to lift itself from the situation.
Amongst the growth strategies available Intel chose market penetration strategy so as to increase its market share which had dwindled due to increased use of competitor goods. Intel began branding their products after the use of codes failed to guarantee copyright protection since engineering numbers could not be trademarked (Kotler, Keller and Burton, 2009). In order to popularise its Pentium brand and fight competition, Intel used the Intel Inside marketing campaign to advertise the company in the minds of consumers.
The market penetration strategy is well explained by the approach used by Intel to increase market share in a market which was slowly being taken over by competitors. The company was willing to use which ever marketing opportunity that was available to appeal to consumers. They assisted computer makers to advertise themselves provided that they placed a sticker that indicated that the Intel microprocessor was inside the PC or laptop.
Intel also used TV adverts to popularise its products in its twelve largest markets globally through mass media. To supplement television as a medium for mass media advertising, Intel also used print, outdoor advertising and online marketing to carry out their marketing campaigns. These efforts have paid off since Intel is now one of the most valued brands globally with a value exceeding the 2006 figure of US$ 32 Billion (Kotler, Keller and Burton, 2009).
Summary
All companies desire to obtain growth which is seen to be an indication of prosperity.
Growth is brought about when a company expands its market share either by entering new markets, increasing market share in existing market, creating new products or diversifying the product range.
Growth strategies revolve around a new product/ market or the existing product/ market.
Other companies have used mergers and acquisitions to generate growth since they are able to gain from the market share of existing companies.
What strategies have proven successful in the growth of Small and Medium Enterprises (SMEs) into larger firms and which have been shown to fail?
Various strategies have been developed and deployed with a sole purpose of achieving success for small and medium enterprises commonly referred to as SMEs in most economies.
This is so because SMEs are generally known for developing into larger firms later on which in the end have got various impacts on an economy which are both positive and negative (Aldrich and Zimmer, 1986). This therefore form mean that for any SME to be successful strategies must come and they should incorporate increase in competitiveness of SMEs and realisation of the goals defined.
Further, these strategies must define the roles of a government and specifically the local governments since majority of small and medium enterprises operate locally. Governments are greatly involved in the success of SMEs, because they are directly involved in stimulating SMEs by providing favorable environment for businesses and the legal framework that SMEs adhere to. Therefore, government assistance to SMEs is of great interest.
Some of the strategies that have proven to be successful for SMEs are:
Improving the business climate through assessment of new rules so as to evaluate impacts, and majorly reduce administrative barriers for their existence;
Strengthening and improving financial support through easy access to loans and grants; this strategy aims at tackling the expensive bank product such as interest rates and how the products can be easily accessed without difficulties;
Promoting entrepreneurship and SME competitiveness. This can be achieved through development of necessary institutions to offer support needed. It can also be done through providing consulting services which aim at issuing out of the necessary information to entrepreneurs;
Supporting business starters is another strategy which promotes success. This can be through strengthening of the infrastructure of SMEs, improving financial access and offering quality non-financial support (Bort, 2012).
SMEs are important to any economy. This is because they play a major role in poverty alleviation. In Thailand, for example, SMEs make up to 98% of all establishments of the Thai Economy with small enterprises making up to 76% and the remaining percentage contributed by the medium enterprises (Chuthamas, et al, 2011). In addition, the percentage of those employed by these enterprises stand at 39.8%. This therefore makes the sense that small and medium enterprises are important when it comes to poverty eradication.
Enterprises success are also based on certain factors which are entrenched in the four strategic outline, these are financial support strategy and the innovations it puts on the markets. Specifically, if an enterprise can support itself without depending on other sources of finance the better, this is because the debt load will be lowered.
Enterprises that have successfully grown because of this are Adobe Systems Incorporated and Motorola which are both ICT firms. Motorola, for instance, with its market capital value at $14billion and with its new product waiting for launch the Windows 8 tablet and other Android devices.
This shows how financially the firm is self-reliant and implementing the innovation strategy of launching new products. The same applies to Adobe Systems Inc., which is investing so much in innovation and planning to launch a new product the Photoshop Touch application for handheld devices, and with its market value at $16billion the firm is well off to face the markets.
SMEs are affected directly by tough economic times in their entire lifetime; this means that the output is seriously affected and in most cases negative results are incurred. Access to finance is believed to be the major cause of their failures accompanied by poor management. Constraint access to finances and poor management may prove that financial support to SMEs is way below the par. An example to illustrate this is well put by two firms which are Global Manufacturing Company (GMC) and Opes Prime.
GMC a company dealing with manufacturing suffered a drastic drop in its sale and experts believe that this was a result of poor management and failure to apply damage control measures and strategies. Further, the company’s debt load had risen and access to finances was severely diminished. These eventually set barriers that became difficult to overcome hence the collapse which meant that restructuring the whole company and resurrecting it was close to impossibility (Thomson, 2009).
Opes Prime, a financial services firm, became a victim of poor management which haunts majority of small and medium enterprises. Because of poor management, client debts were not tackled amicably thus resulting in a collapse of the firm. This ended up affecting about one thousand clients. This therefore means that promoting financial support and management of finances is of great interest, thus stimulation of SMEs by use of grants also helps in avoiding collapse.
In summary, small and medium enterprises are of great importance to an economy, and for them to be successful, appropriate strategies must be put in place and applied well so as to ensure success of SMEs and avoid failure.
Thomson, J. (2009). 25 corporate collapses – and the lessons learnt. Web.
Aldrich, H., & Zimmer, C. (1986). Entrepreneurship through social network. In D. L. Sexton & R. W. Smilor. (Eds.). The Art and Science of Entrepreneurship. Cambridge: Ballinger Publishing, pp. 3-25.
Chuthamas, C., Aminul, I., Thiyada, K., & Dayang, H. (2011). Factors Affecting Business Success of Small & Medium Enterprises (SMEs) in Thailand, Asian social science, 7(5).
The modern global market provides a lot of opportunities for the companies’ development. To success within the market, it is necessary to focus on the definite aspects of the companies’ strategic direction. It is possible to refer to many corporate strategies used to increase the company’s potential within the market.
However, there are also concerns and barriers which can prevent the firm from the successful development and growth according to the international standards. From this point, it is necessary to determine four main issues the focus on which is important for developing the effective company’s strategic direction. Thus, the increase of the company’s potential is based on the effectiveness of the new product introduction.
To guarantee the success of the process, it is important to pay attention to the patent and design issues in order to protect the usage of innovation by the company. The introduction of the new product can contribute to the company’s global presence with references to the expansion into new markets.
To meet to the tendencies of the global market, it is necessary to respond to the culture and gender issues developing the approaches to recruitment.
Thus, the issues of the new product introduction, patent and design protection, the expansion of the global market participation, and specifics of the culture and gender questions are closely connected with each other, and they can affect the company’s development with references to the strategic direction significantly.
The global business environment is more competitive today in comparison with the situation typical for decades ago. Much attention is paid to the quality and effectiveness of the strategies proposed to develop firms within the market. From this perspective, a strategic direction used by the company is its way to achieve significant success in industry.
However, the implementation of effective strategies is often associated with resolving the problematic issues and concerns. Many approaches to strategic direction with references to the concept of strategic importance depend on gaining competitive advantage (Chaiprasit 2009).
To stay competitive, it is important not only to support and promote the existing brands but also to introduce new products responding to the customers’ expectations.
Introduction of a New Product
The introduction of a new product is the guarantee of stimulating the customers’ interest to the brand. Nevertheless, companies should focus on such issues as the market potential for introducing a new product, the competitiveness of the market, the costs of the product’s development, technological and innovation issues, the time limits for introduction, and all the associated risks.
To introduce a new product, it is necessary to orient to the target customers as well as to the potential customers who can become interested in a product proposed. In spite of the fact there are a lot of risks connected with the possible success of the product within the market, the introduction can be realised effectively basing on responding to the above-mentioned factors.
To introduce a new product, the company focuses on usage of new resources and on following new behaviours in order to achieve their higher results. The process of the product’s introduction is often time consuming, it is associated with spending a lot of costs (Bloodgood & McFarland 2004).
However, the benefits of the process are also great, and this strategy helps firms to improve the performance within the definite market or to enter a new market, and contribute to the company’s global performance.
The company can reduce the risk of failure during the process of the new product introduction focusing on balancing the costs and usage of technologies after the proper analysis of the market, tendencies in its development, customers’ needs and expectations (Wan & Hoskisson 2003).
From this point, the strategy should be directed toward the development of the qualitatively new product which differs much from the existing proposals within the industry.
Patent and Design Policies
If the company’s global presence as the strategic direction depends on the introduction of the new product within the market with references to the expansion of the market participation, it is also necessary to concentrate on the question of the patent and design protection. The initiation costs should be connected with the costs for the necessary technological research and development of the innovative approach to the product.
The introduction of the new product is usually associated with utilising the specific innovations. From this point, the new product should be protected with the help of patent and design laws. The introduction of the new product often means the introduction of the exclusive product within the market because such a strategy guarantees the increase of the customers’ interest to the product and company’s activities.
To protect the exclusiveness of the product and prevent the other firms from imitating the effective aspects of product, it is necessary to develop the effective strategy toward using the patent and design laws. The evaluation of the product’s quality and practicality is closely connected with the development of the effective patent which can protect the company’s innovation and contribute to its development.
For instance, the activities of the VTL Group and its success with customers are affected by the focus on innovation and modern technologies with references to the protection of the company’s intellectual property. The strategy used by the company in relation to the patent and design protection can be discussed as effective when it involves business operations significantly (Hill & Jones 2009).
Thus, the development of the new product can influence the role of competitors within the market and contribute to the company’s taking the higher positions within the industry.
Global Presence
The next important concern is the problem of expansion into new markets improving the global presence and basing on the introduction of the new product. The expansion into new markets is an important step for the company which requires following the effective strategy.
The main components of the strategic direction connected with the improvement of the global presence and expansion into new markets are the evaluation of the market’s potential, its attractiveness, the competitors’ role, and the barriers for entry. To propose the company’s new product or developed brand within the global market, the firm is responsible for identifying the most important markets for entry.
The process of entering the new market can be prolonged and challengeable (Mas-Ruiz, Nicolau-Gonzalbez, & Ruiz-Moreno 2002). Operating the examples of such firms as Toyota or Nissan, it is necessary to pay attention to the fact that the set of realistic time limits is necessary to plan the effective strategy and respond to the main issues.
Developing the introduction of the new product depending on the expansion into new markets, the company aims to follow the market diversification strategy which can contribute to the company’s global presence if the company is able to overcome the internal and external barriers.
The company’s entry into the new markets is associated with focusing on exporting the products which can respond to the customers’ needs and expectations globally (Palpacuer & Parisotto 2003). It is also important to take into account the possible instability of markets in order to be ready to change the strategic approach.
Much attention should be paid to the firm’s flexibility as the significant aspect to operate within the competitive global market (Harris 2002). The external expansion can be discussed as successful when the company’s profits increase with references to using new markets and acting according to the trends within the global market.
From this perspective, the company should refer to the strategic drivers in order to promote the competitive advantage. The risks can be overcome when all the possible barriers and challenges are determined before the strategy’s implementation.
That is why, the evaluation of internal and external environments is important to develop the most effective approaches to the strategy’s implementation (Palpacuer 2006). Thus, global presence and performance depend on the ability of the company to meet the global tendencies and develop the product meeting the requirements of the potential customers which should be of higher quality and practicality.
Culture and Gender Issues
One more concern which should be discussed with references to the strategic direction is the role of culture and gender in expansion into the new markets. Researchers focus on the idea that today the participation of women in strategic management depend on the principles of the gender-egalitarian approach with references to the particular features of different cultures (Brandl, Mayrhofer, & Reichel 2007).
However, there are also cultures in which the participation of women in the business development is not actively supported. From this point, it is important to pay attention to the cultural peculiarities of the regions where the company intends to participate in the market because many Asian cultures do not share the idea of the gender equality in business world (Ndubisi 2005).
As a result, the business communication between companies and departments can be complicated with references to the cultural traditions and gender issues.
Critical and Personal Reflection
The Board of Directors should focus on such issues as the new product introduction, patent and design protection, expansion into new markets, and culture and gender issues because these points are components of the company’s strategic development with its focusing on improvement and progress. Thus, the above-mentioned aspects can be discussed as the issues of strategic importance.
It is necessary to examine these factors in their connection because they affect the firm’s development complexly. As a result, the introduction of the new product based on the usage of innovative technologies is almost impossible without the development of the effective patent and design policy.
The development of the new product introduction strategy is the significant factor to enter the new markets and operate there successfully following the global trends and responding to the cultural peculiarities. I am inclined to support the opinion that the development of the more effective strategic direction should be based on discussing the mentioned factors to contribute to increasing the company’s competitive advantage.
Thus, the strategic growth is closely connected with the effective strategic direction. To be able to overcome all the possible barriers and issues and respond to developing concerns, the company should evaluate not only the internal resources and potential but also the external markets and industry’s competitors in order to develop the most effective strategy.
References
Bloodgood, J, & McFarland, R 2004, ‘New product innovation’, Journal of Business and Entrepreneurship, vol. 16 no. 2, pp. 23-30.
Brandl, J, Mayrhofer, W, & Reichel, A 2007, ‘Gender-egalitarian culture and differences in strategic integration among women and men in HR director positions’, Management Research News, vol. 30 no. 9, pp. 634-645.
Chaiprasit, S 2009, ‘Strategic direction, competencies and going global on global performance and development in Thai firms’, The Business Review, vol. 13, no. 1, pp. 142-148.
Harris, P 2002, ‘European challenge: developing global organizations’, European Business Reviews, vol. 14 no. 6, pp. 416-425.
Hill, C, & Jones, G 2009, Strategic management theory: An integrated approach, Cengage Learning, USA.
Mas-Ruiz, F, Nicolau-Gonzalbez, J, & Ruiz-Moreno, F 2002, ‘Foreign expansion strategy and performance’, International Marketing Review, vol. 19 no. 4, pp. 348-360.
Ndubisi, N 2005, ‘Gender differences in the use and antecedents of use of strategic-level systems’, Journal of Business and Entrepreneurship, vol. 17 no. 2, pp. 114-121.
Palpacuer, F 2006, ‘Globalization and corporate governance: issues for management researchers’, Society and Business Review, vol. 1 no. 1, pp. 45-61.
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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.
The platform to help Emirati small business will require quite a specific marketing strategy. Clearly, the platform implies a lot of online communication with customers. Therefore, it is but natural to implement a wide advertising campaign on the Internet. It will not be a financial burden but it will require a lot of time to prepare it.
First, it is essential to develop the major appeal. The target audience of the company is quite wide and may be diverse. These are owners of local businesses who are often young (20-35 years old) and quite inexperienced in entrepreneurship. It is necessary to note that the majority of customers will be males. However, the contemporary Emirati business ecosystem is quite diverse and females become its members. Young people often use the Internet to acquire information and, hence, Internet-based platform will be ideal for them. The major appeal to the target audience will be as follows: We will provide you with the necessary knowledge and skills to succeed in the changing business environment of the UAE.
It is important to make a number of posters featuring young Emirati people doing business (meeting people, talking on the phone in an office, selling goods, sewing, tending flowers and so on). There can be some mottoes or people’s quotes. A brief video can also be used online. The ads will be placed as pop-ups and at certain websites. It is essential to cooperate with Google Search though this may require additional funds. At the same time, it is possible to address Google and invite the company to participate in a social project as the platform will be helping small businesses, which can be compared to social entrepreneurship. It is noteworthy that social networks have been seen as efficient tools for marketing though the use of this resource is very time-consuming and inappropriate for a small business (Wang & Wang, 2014).
Growth Strategy
Mubadara may start as a small business but it is likely to cover significant number of people and considerable territories since this is an Internet platform. Sharing ideas and readiness to acquire new knowledge are major characteristics of young entrepreneurs these days (Wang & Wang, 2014). The platform will attract more and more customers.
To meet this expansion, the company will need to hire a team of managers who will be able to handle such spheres as IT technology, HR, marketing, accounting and customer support services. The staff of the company will increase with the increase in the number of customers. One of central issues to address is managing the change.
An effective growth strategy for Mubadara will be a combination of two strategies: market expansion and diversification. Market expansion will aim at covering new territories and, eventually, countries. The company can eventually become a global platform that enable entrepreneurs of different parts of the global share experiences.
Another element of the strategy will be diversification. The world is changing rapidly and all these changes are manifested in the digital world. Therefore, it is crucial to identify changing trends and respond accordingly. Thus, entrepreneurs tend to need a variety of services and Mubadara has to be able to provide these services to its customers. Thus, apart from business consultations, the company may offer assistance in dealing with legal issues, identification of business opportunity, education opportunities and so on.
Exit Strategy
Effective entrepreneurs have to develop an efficient exit strategy when developing their business. Peters (2009) identifies a number of exit strategies that can be applicable in different settings. A small business can consider the following strategies: keeping the business in the family, selling the business to employees, selling the company in the open market, selling the business to another company.
The first option is not applicable for Mubadara as it is not a family business. However, the rest of strategies can be taken into account. For instance, it is possible to sell the business to the employees. This may require development of the Employees Share Ownership Plan. This is a good option for the company as there are high chances that it will develop as employees are interested in keeping the company successful.
At the same time, two options are the most effective and profitable for owners. Hence, it is possible to sell the business to another company. Peters (2009) stresses that this can be a good option for an Internet platform, which exists for a few years. Admittedly, the new company should run the same operations and should have similar values. It is responsibility of the company’s owners to make sure that the company will continue developing and the staff will have their jobs. However, it may be difficult to find a potential buyer.
Another option is selling the company in the open market. This is a transparent and easier way to find a buyer. Again, the owners have to pay attention to the new company’s values, traditions and intentions. It is necessary to remember that Mubadara is a company that makes a difference and contributes to development of the Emirati society.
Reference List
Peters, B. (2009). Early exits: Exit strategies for entrepreneurs and angel investors (but maybe not venture capitalists). Canada: Basil Peters.
Wang, S., & Wang, H. (2014). Information technology for small business. Boca Raton, Fl: Universal-Publishers.
How difficult was the task Immelt faced when he assumed the CEO role in 2001? Was there any imperative to maintain the past operation?
Immelt task was not an easy one. First, a lot was expected from him considering the fact that his predecessor (Welch) had made GE thrive into a successful firm. Immelt needed to ensure that the company continued to enjoy its success. In other words, Immelt needed to find ways of increasing performance according to the stakeholder’s expectations. In fact, the shareholders were used to increased performance in terms of consistent growth on sales and earnings.
Moreover, Immelt became CEO at a time of terrorism set backs and a shaky economy. Four days after his appointment, the World Trade Center towers were attacked. Besides, a scandal involving Enron, one of the G.E’s companies, became known leading Enron to bankruptcy. All this changed the corporate landscape. In fact, Immelt had a big challenge in managing the impacts of these crises. The unfortunate events led to a destabilised fragile stock market.
Moreover, the turn of events triggered a downturn in an overheated economy. All these factors led to the loss of confidence from the investors creating resentment in the community at large. Immelt had to act otherwise the company is moving towards liquidity. In an effort to help in the crisis, the firm’s donations ranged from financial assistances to medical equipment.
Despite the financial assistance, Immelt hopped to increase the firm’s earnings significantly within the two year financial period. With the current circumstances, the financial analysts were eager to see thios greate achievement. Despite the strategies that were put in place, the share prices fell significantly below 7% within seven days leading to over $80 billion dollars loss in market capitalisation.
The drop in share prices and market capitalisation was below the expectations of G.E since Immelt’s profits annual growth target was placed at18%. Compared with Welch era, the stock price stuck at around $35, 20, which was only half of the price-to-earning (P/E) ratio of the predecessor. As a result, Immelt was seen as a failure and he had to find ways of making things right. Change was inevitable due to all this issues. Immelt had no choice but to give up on the past operations and find ways to increase G.E’s revenue.
Whether Immelt’s management approach was different from Welch’s form of management and whether they faced similar challenges
Immelt’s challenges were different from those of Welch. As such his management approach had to be different. Actually, Immelt changed the firm to become more innovation driven in order to deal with new environment. After fallout with Eron, Immelt worked hard to maintain the previous relationship with both the investors and other stakeholders.
This was aimed at regaining the stakeholders’ confidence in G.E. Besides, he made a stream of timely acquisitions and clever deals that propel the firm to a better growth path. He decided that premium will be placed on companies that could generate their own growth and sold the underperforming businesses to fund his strategy.
What were the major differences in strategic vision between Immelt and Welch?
Immelt concentrated more on marketing as compared to Welch who concentrated on production. In addition, he initiated ACFC (At the Customer for the Customer), which was an initiative to bring G.E’s practices to meet customers’ challenges. Moreover, Immelt held Town Hall Meetings to get an idea on what the customers wanted.
Further, Immelt initiated transparent operations. On the other hand, Welch encouraged communication between employees at all levels, which became a motivating factor. Such actions ensured good work relation and understanding between the employees. However, Immelt established external communications. The action was because he recognised that corporate executives face critics. Therefore, external communication established more openness and trust and managed G.E’s public relationships with all the stakeholders.
Additionally, Immelt was more committed to social responsibility. He believed people should work in a firm that they can help make a change in the world. Immelt also invested in research centers. He upgraded G.E’s research and development center in New York. In addition, he established a center in China and also authorised the construction of a new one in India.
Would you have proposed a similar strategy like Immelt? Why or why not?
Immelt strategy was a brilliant one. He did analyze the market and then set his long-term business goals and stuck to then, before he implemented his strategy. The strategy turned out to be successful because he decided to focus on the customer. Clients’ preferences remained significant to the firm.
The firm realised that maintaining the customer base and satisfaction is important for sales growth. Immelt got more people to work for him due to his commitment to corporate social responsibility. Immelt realised that having employees who are motivated leads to increased performance.
How well was Immelt implementing his strategy? What were his greatest achievements?
Immlelt did implement his strategy to the latter. The strategic focus was to make profits. Considering the fact that he took over when the market was in turmoil, he did manage to come out as the winner in the long-run. I guess the “end justifies the means.” Immelt managed to fuel top-line growth through acquisition and geographical acquisitions. In 2003, G.E’s revenue was already going up. By 2004, revenues outside the U.S.A grew to over 15%. Immelt also managed to make GE maintained its competitive edge through innovations.