You may have heard the story of how Facebook, one of the biggest social media platforms, came into existence. The 2010 movie The Social Network depicted it quite well. Mark Zuckerberg, the founder, started it in his dorm room at Harvard University. The initial users were restricted to Harvard but once it got attention, students from other colleges began using it. Eventually, it was accessible to non-students as it widened its customer base. Facebook’s success took over MySpace, a leading social media network at the time.
The Facebook story contains many growth strategy examples in business. Let’s see what a growth strategy is, its types and its importance in modern-day businesses.
Understanding Growth Strategy In Business
A growth strategy is an organization’s plan of action that helps increase its market share. Put simply, it helps an organization prepare for and overcome current and future challenges to recognize its goals for expansion. For example, if your business is looking to expand, a market growth strategy will encourage you to create your path for expansion while considering your finances, target market and industry. Other growth strategy examples include acquisition of assets, increasing market share and improving products or services.
There are several factors that play out while creating a corporate growth strategy. Successful adoption of the right kind of growth strategy at the right time is a must for business survival in the long run. As growth involves risk, businesses should prepare for internal and external interferences such as technology, competitions and government regulations. However, it is a growth strategy in business that helps organizations find the safest way to maximize gains and minimize the risk of unforeseen circumstances.
Exploring Types Of Growth Strategy
Growth strategy in business can be classified into two main types: internal growth strategy and external growth strategy.
Internal Growth Strategy
As the name suggests, an internal growth strategy deals with internal business operations and associated activities. Also known as organic growth strategy, the process refers to an organization’s growth using internal sources. There are four types of growth strategy that happen organically:
1. Product Development
Here, the business aims at creating new products or services that are able to contribute to its growth in the market. This growth strategy is one of the most effective ways to keep customers interested in your brand as you continue solving challenges through your product(s).
2. Market Development
This entails growing your market share by expanding your user base, tapping into new customer segments and expanding product usage. A market growth strategy is primarily sales-focused.
3. Market Penetration
It’s the most intensive form of organic growth strategy. Businesses rely on this to ensure that their market share is growing in the best possible manner. This strategy helps grow your market share by lowering prices, bundling products and advertising.
4. Diversification Strategy
In this type of internal growth strategy, businesses enter entirely new markets to expand instead of expanding within existing markets. Basically, an organization launches into the unknown with a new product or service. It may be the riskiest but the most rewarding of all strategies.
External Growth Strategy
Also known as an inorganic growth strategy, this method involves the use of outside resources and capabilities to increase business output. Simply put, they are obtained externally. There are two types of external growth strategies:
1. Joint Ventures
In this type of inorganic growth strategy, two or more organizations enter into an agreement to establish a new enterprise. Organizations having joint ventures participate in equity capital.
There are times when businesses competing in the market offer different solutions to the same problems. They can instead collaborate and form a partnership to expand their market share. Mergers allow you to have a more cooperative approach rather than a hostile one.
Making The Right Calls
Developing a solid growth strategy in business requires proper planning and understanding of the market as well as competitors. Planning your strategy needs critical thinking and effective decision-making. If you want to make the right calls at the right time, it’s important that you make the right decisions. Harappa’s Making Decisions course will teach you how to sharpen your decision-making skills for a successful professional life. It’ll equip you with frameworks to process, reflect and include multiple perspectives for informed decision-making. You’ll engage in good decision-making and produce desirable outcomes. Make the right call, try Harappa today!
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