The document discusses different strategies for business growth and expansion, including vertical integration, horizontal integration, related diversification, and unrelated diversification. Vertical integration involves extending a firm's activities backward into supplying raw materials or components, or forward into downstream markets. Horizontal integration means entering new, closely related businesses using similar processes, technologies, or markets. Related diversification adds new products or markets related to the core business, while unrelated diversification expands into areas without direct connections to the existing business.
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strategy.pptx
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2. GROWTH /EXPANSATION STRATEGY
MEANING:- The growth strategy is called as expansion strategy .To
achieve higher targets than before ,a firm may enter into new market,
introduce new product lines, serve additional market segments, and
so on .
GROWTH /EXPANSATION STRATEGY
3. 1)VERTICAL INTEGRATION:- it consists of extending
the activities of a firm it can be in two forms :-
a) Backward integration :- In backward integration a company
moves one step backwards from the current line of business.
For instance, a firm may tie up with supplier of raw materials
or take over a firm that supplies raw materials and/or
components, hero cycles has set up a subsidiary to
manufacture cycle wheels and tubes.
b) Forward integration:- In this case the company moves one
step ahead of its current line of business activities. For
instance, a cloth manufacturer may enter into readymade
garments business.
2) HORIZONTAL INTEGRATION:- when a company
enters into a new business which is closely related with the
existing line of business through processes , Technology or
markets. for instance, a gents readymade garment
manufacturer may enter in the business of ladies ready made
garment .
4. Related Diversification
• Related Diversification occurs when the company adds to or expands
its existing line of production or markets. In these cases, the company
starts manufacturing a new product or penetrates a new market
related to its business activity. Under related diversification the
company makes easier the consumption of its products by producing
complementing goods or offering complementing services.
• For example, a shoe producer starts a line of purses and other leather
accessories; an electronics repair shop adds to its portfolio of services
the renting of appliances to the customers for temporary use until
their own are repaired.
5. Unrelated Diversification
• Unrelated Diversification is a form of diversification when the
business adds new or unrelated product lines and penetrates new
markets.
• For example, if the shoe producer enters the business of clothing
manufacturing. In this case there is no direct connection with the
company´s existing business - this diversification is classified as
unrelated.