Internal Growth Strategy VS External Growth Strategy.
A corporation can grow using two ways. The first is an internal growth strategy, whereas the second is an external growth strategy.
The following are internal growth strategies:
Market Penetration- Market Penetration refers to a company's ability to grow through boosting sales of existing items to existing market groups without altering the product itself. Its goal is to expand its market share by heavy marketing to existing clients. In market penetration, there are two options. As I may sell to my present consumers who have previously purchased my goods. I can either persuade them to purchase more or I could just select a small portion of the competition. For example, Lux soap sells a blister pack with 3 soaps, and when someone buys two, they get a another one for free. As a result of this technique, Lux soap is able to sell more products to its customers. Another thing I'm aware of is that there are clients that consume Keya soap. So, in order to attract Keya soap’s customers, Lux soap can run a promotion. For instance, if anybody buys Lux soap, he will receive a small shampoo packet.
Product Development- A company's growth is based on the modification or introduction of new items to existing markets. This determines what customers desire and need. This establishes innovative and distinct trends. Through research and development, a new product is created. If sufficient research is not done and new items do not meet client wants, the strategy might be dangerous. For example, Google has added a variety of new technology products.
Market Development- A company's growth is based on finding and developing new market segments for existing items. Managers could do research into new geographic markets. It could be attempting to reach out to a new market sector than its usual customer.
Diversification- Diversification refers to a company's expansion into new areas with new items that are either connected to or wholly different to its current product. This type of tactic can be extremely dangerous. When implementing a diversified growth strategy, a corporation must prepare properly. Marketing research is necessary because a corporation must identify whether consumers in a new market will be interested in the new products.
Market Development- A company's growth is based on finding and developing new market segments for existing items. Managers could do research into new geographic markets. It could be attempting to reach out to a new market sector than its usual customer.
Diversification- Diversification refers to a company's expansion into new areas with new items that are either connected to or wholly different to its current product. This type of tactic can be extremely dangerous. When implementing a diversified growth strategy, a corporation must prepare properly. Marketing research is necessary because a corporation must identify whether consumers in a new market will be interested in the new products.
Microsoft is a very good example of
internal growth strategy. When Microsoft recognizes a new market with
opportunity for its products and services, it enters it. HoloLens, for
example, was previously exclusively available in ten countries,
including the United States, the United Kingdom, Canada, Australia, and
Germany. HoloLens was distributed to an additional 29 markets after
demand for the device grew on a worldwide scale.
The following are external growth strategies:
Merger- Merger is an external expansion strategy in which the operations of two organizations are combined on a relatively equal level. In most cases, a merger occurs between two companies that are on an equal level. The companies decided to merge in order to get more market share. When two organizations merge, the top management of both companies sets their strategies. Mergers take place between two corporations in specialized markets, rather than across all marketplaces.
Acquisition- Acquisition is an external growth strategy in which a corporation buys another corporation in order to extend its business. This type of approach could be used by a company to expand its product line and reach new markets. A growth plan based on acquisitions can be risky, but not as dangerous as a diversification strategy. The basic goal of acquisition is to get more market share.
Strategic alliances- Strategic alliances are agreements between two or more companies to collaborate for the mutual benefit of both parties. It is not a complete transfer of ownership between the involved parties. Instead, organizations aggregate their assets and resources for a limited time in order to achieve set objectives while staying fully independent.
In 2005, Google paid an estimated $50 million for Android. It is one of the best examples of external growth strategy. Android was a relatively unknown mobile startup at the time, so the action attracted attention. The acquisition, on the other hand, provided Google with the resources it required to succeed in a market occupied by Microsoft and Apple.
Acquisition- Acquisition is an external growth strategy in which a corporation buys another corporation in order to extend its business. This type of approach could be used by a company to expand its product line and reach new markets. A growth plan based on acquisitions can be risky, but not as dangerous as a diversification strategy. The basic goal of acquisition is to get more market share.
Strategic alliances- Strategic alliances are agreements between two or more companies to collaborate for the mutual benefit of both parties. It is not a complete transfer of ownership between the involved parties. Instead, organizations aggregate their assets and resources for a limited time in order to achieve set objectives while staying fully independent.
In 2005, Google paid an estimated $50 million for Android. It is one of the best examples of external growth strategy. Android was a relatively unknown mobile startup at the time, so the action attracted attention. The acquisition, on the other hand, provided Google with the resources it required to succeed in a market occupied by Microsoft and Apple.
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