With globalization, markets are increasingly competitive and a bad decision or a wrong business growth strategy can lead the company to failure. Consumers are acquiring new habits, which makes the future uncertain. That is why companies must be alert to adapt to the constant changes and requirements imposed by consumers. So what strategy to grow a business do we adopt? We will break it down for you in our new post.
Companies are immersed in changing and globalized markets where competition is increasingly fierce, which encourages companies to innovate in the way they grow to acquire markets and position themselves in them. Every company aims to obtain profitability through growth strategies that allow them to increase and enhance their income. Therefore, betting on a growth strategy allows the company to improve its competitive position or consolidate it.
Growth Process Of A Company
Depending on the stage a company is in, it will have to carry out one strategy or another since the objective to be achieved will change. It is very important to know which growth strategy to follow in each one of them since, as we have said on other occasions, the key to a business model lies in its strategy.
In the same way, it should be mentioned that every businessman must also look at the growth indicators of a company. If you don’t pay attention to the numbers, you don’t know if you’re really growing. In some cases, income may have increased, but that does not mean that it is growing since the volume of expenses may also increase. Some indicators of a company’s growth are the conversion ratio, the income statement, the positioning of the brand, the visibility of the business or the increase in sales, among others.
Growth Strategy For Companies
Some theorists have indicated that there are only four possibilities in the growth process of a company according to the Igor Ansoff model: product development, market development, penetration or diversification. However, other more complex possibilities have been carried out in practice. In this post, we want to indicate the best-known ways of how to grow a company thanks to the different types of growth strategies.
The Ansoff matrix is a widely used marketing tool to identify the growth strategy to follow depending on each situation. It can be applied to any type of company and answers the question “where to grow” based on two pillars: the market and the products. In this sense, the matrix establishes four basic strategies:
- Market penetration: consists of increasing a company’s sales in the markets in which it is present and with current products. This is acquired when we manage to increase our market share (our clients buy more of our product) or when we manage to grow with the expansion of the market (we attract new clients). It is the growth strategy with the least risk and the best option if you want to continue growing naturally.
- Product development: it is based on working with the current customer segment. This growth strategy is aimed at businesses that are committed to innovating or developing new products because the current ones show signs of exhaustion. Every entrepreneur knows that the needs and tastes of his clients change and what needs are not covered, so launching a new product and/or service will help him obtain more income from the clients he already has. The key to this strategy is to know well the needs of your consumer. It has a greater risk since we do not know how current clients will react to the new proposal and therefore methodologies such as Lean Startup are used for development.
- Market development: this strategy has two options, either the product and/or service is expanded to new geographical areas or new segments are sought within the same area of influence. That is, it seeks to open the range of customers.
- Diversification: it is about launching a new product for new markets, or in other words, expanding the business horizon. In this way, the risk will be distributed by not betting on a single market or a single product. Diversification can be applied in a related way (it seeks to combine two or more activities that have some type of relationship) and unrelated (the products and/or services that the company has offered so far are not related).