Please enable JavaScript.
Coggle requires JavaScript to display documents.
CHAPTER 10: GROWTH & EXIT STRATEGY, AINI SOFIA BINTI MOHD ZOPRI…
CHAPTER 10: GROWTH & EXIT STRATEGY
:sunny:
4 Key strategies of business growth
:notes:
Market Penetration
To increase market share using existing products or services in existing markets through the intensification of a company's marketing efforts.
:check: Markets that are not yet saturated
:check: Current customer's usage can be increased
:check: Market share of competitors are on a decline but industry sales are increasing.
:check: Increased economies of scale provide competitive advantage
:check: Historically, sales and marketing expenditures are highly and positively correlated.
:notes:
Market Development Strategy
Involves introducing a company's existing products to new groups of customers.
:check: An untapped or unsaturated market exists
:check: New channels of distribution are available that are reliable, inexpensive and of good quality
:check: Business has the needed capital and human resources to manage expanded operations
:check: Business has excess production capacity
:check: The business' basic industry is rapidly becoming global in scope
:notes:
Product Development Strategy
Involves increasing sales by improving or modifying present products or services so that the existing customers would update or upgrade through the purchase of new products.
:check: A business has successful products that are in the maturity stage of the product life cycle.
:check: A business operates in an industry that is characterized by rapid technological development
:check: A business operates in a high-growth industry
:check: Major competitors offer better quality products at comparable prices.
:check: A business has strong R&D capabilities
:notes:
Diversification Strategy
Involves a company branching out into new markets and new products primarily to protect themselves from being too dependent on a particular market.
:check:
Related diversification strategy
Refers to a situation whereby a business diversifies into another area that is strategically fit with the existing business.
:check:
Unrelated diversification strategy
Refers to a situation whereby a business diversifies into another area that is totally different from the existing business activities.
:notes:
Acquisition
The process of gaining control of other business.
Normally this process is done through the purchase of shares of the acquired company either through a private deal or via the stock market.
:check: Vertical Integration
:check: Lateral Integration
:check: Horizontal Integration
:bird:
4 Implications of business growth to the entrepreneurial firm
:fries: Its capabilities and resources would be challenged.
:fries: Also a possibility that the business may need to bring in new suppliers to the business to ensure that the inventories must always be available and adequate.
:fries: Create pressure on human resources
:fries: Restructuring of the business
:bird:
Increase in Demand of a Company's Existing Product
:no_entry: Because the equipment still have a value in the market but at the same time incurring a loss.
:bird:
Reasons for Exit
:sunny:
Either poor or strong performance of the venture
Poor venture performance may force the entrepreneur to end the business because it has reached the declining stage of product life cycle or the venture is operating in a declining industry and experiencing a decline in profits.
:bird:
Exit Strategies
:notes:
Exit Barriers
Not an easy task for entrepreneurs.
It requires a careful planning and cannot be done abruptly.
Could be in the form of obligations to customers' long-term contract with suppliers, financial obligation with financial institutions or high investment in fixed assets.
:notes:
Exit Process
Determined by first establishing an exit goal which then, followed by the choice of an optimal exit option and later to a strategy and plan to achieve that goal.
:no_entry:
List of 4 exit barriers
:check: Nascent Exit
:check: Infancy Exit
:check: Growth Exit
:check: Maturity Exit
:bird:
Harvest Strategy
A strategy pursued by a strong performance business in an effort to cash out and harvest the profit.
:bird:
Retrenchment Strategy
Occurs when a business regroups by reducing cost and asset to reverse declining sales and profits in order to have a more stable financial position.
:bird:
Factors that influence technopreneurs to pursue retrenchment and harvest strategy
:bike:
Initial Public Offering (IPO)
IPO typically refers to the first sale of private venture's shares to the public on a public stock exchange.
It is usually practiced by smaller, younger companies looking for capital for the purpose of business expansion.
:bike:
Private Equity
The sale of private venture's shares to private financial investors such as angel investors and/ or venture capitalists.
:bike:
Sale to another business
The sale of private venture's shares to another operating company is considered as a good option for entrepreneurs to exit and reap the highest possible value or gain.
AINI SOFIA BINTI MOHD ZOPRI (2017302875) EH2207C