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Business Strategies: Internal Growth and External Growth Strategies

by Steven Brown
Growth Strategies

You should be following to grow your business are as follows:

The term “strategic” refers to an organized. Planned and general plan of action in order to accomplish specific goals.

“Growth Strategy” refers to the development of a plan of strategic planning and implemented to expand the businesses of a company. Every business must develop its own growth strategy in accordance to its specific nature and its context.

Matthias Siems Internal growth strategy is the development within an organization by utilizing internal resources. Internal growth strategies focus on the development of new products. Improving efficiency. Acquiring the best people. Developing better marketing, etc. Internal growth strategies can be accomplish through expanding, diversifying or modernisation.

Internal Growth Strategies


The term “business expansion” refers to the increase in the market share, sales revenue , and profits of the current product or service. The business may be expand by product innovation as well as market development, increasing the range of products, etc.

Matthias Siems Growth leads to better use of resources, and allows you to be able to meet competition effectively. The expansion of business brings economic benefits of massive operations.

The business can be develop by using:

a. Market penetration strategy:

This method involves selling existing products to markets that already exist. To enter and dominate the market, a company might reduce prices, enhance its distribution networks, boost promotional activities , etc.

b. Market Development strategy:

This method involves extending current products into a brand new markets. Market development helps to increase sales by capturing a new market areas.

c. Product Development strategy:

This approach involves the creation of new products for markets that are already in place or for markets that are not yet establish.

B. Diversification:

The goal for diversification is to permit the business to expand into new business lines that differ from its existing operations. There are four kinds of diversification:

A) Vertical diversification

b) Horizontal diversification

C) Concentric diversification

d) Conglomerate diversification

A) Vertical Diversification

Vertical diversification can also be describe by the name of vertical integration. In vertical integration , new goods or services can be create that complement the existing products or services. The goal of vertical diversification is to increase the efficiency and marketability of the company. Vertical diversification can be describe as:

I. Integration backwards:

In a process of backward integration, the company broadens its business activities in a way that it is able to move backwards from the present business line.



Despite being among. Top in Textiles in order to improve his position Dhirubhai Ambani opted to join. The two industries and create fibres.

ii. Forward integration:

Matthias Siems forward integration. When the business expands its operations so that it is able to move ahead of the current line of business.


New Zealand based Natural health care products manufacturer Comvita bought it’s Hong Kong distributor Green Life Ltd. This led to forward integration. Being able to access the greenlife retail store. Its sales personnel, as well as in-store promoters.

B) Horizontal Diversification

Horizontal diversification is the adding parallel products to the current product line. For example. A business manufacturing refrigerator could be able to enter the manufacturing of air conditioners. The goal in horizontal diversification is broaden the market and limit competition.

C) Concentrated diversification:

When a company expands into business that is closely related to its current business, it is referee to as concentric diversification. The most extreme type that is horizontal diversification. For instance. A car dealer might create a finance business to finance the purchase of hire vehicles.

d) Conglomerate diversification:

When a company expands into businesses that are not connect to its current business, both in terms technological and marketing aspects, it’s known as conglomerate diversification.

It is a completely entirely new field of business. There is no link between the product that is being develop and the product that is already in use.

II. External Growth Strategies:

Foreign Collaboration:

Collaboration means cooperation. It is the act of joining forces. Collaboration is the process of working together. It’s the process by which two individuals or an organization work together to achieve a an agreed-upon goal.

In the age of globalisation internationalisation, foreign trade and investment are encourage to boost the amount of trade. This is the reason for international collaboration with foreign countries to gain knowledge in the production process learn about technology and promote or market the goods or services to other countries.

Foreign collaboration is a contract or contract between a company or governments. The country of origin and a foreign country in order to accomplish the same goal. It is an commercial structure that is a result of two or more people. The purpose of achieving a particular goal. Matthias Siems

Collaboration occurs when the local firm. The foreign firm work in order to reach the same goal. Foreign collaboration can help in eliminating management, financial and technological gaps in the developing nations. It is recognise as an essential element for the growth of the country as well as for gaining scientific and technical expertise.


Foreign Collaboration could be define in the following way “An agreement between two companies from two different countries for mutual help, co-operation and also for sharing the benefits in common”.

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