2. FAM YEE SHENG (BB16160940)

3. GAYATHRI GOVINDASAMY (BB16110276)

4. HEMLEEN A/P SOOSAI MANICKAM (BB16110325)

5. LIUANJUN (BB15271048)

6. RUPINI A/P BALASUNDROM (BB16110456)

7. SHOBANA A/P SELVAM (BB16110128)

8. UMA DEVI KESAVAN (BB16110479)

9. VIRSHALINI A/P MANIMARAN (BB16110331)

10. WANG QIN XUE (BB15271054)

Internal growth strategies involve efforts taken within the firm itself. For example, new product development, new process and internal expansion. It is also known as organic growth. These internal growth strategies can happen through expansion, diversification and modernization of a firm. 

 

1) Expansion refers to how firms expand their scale of operations. Expansion helps and guide a firms’ business to make use of resources efficiently and to compete in the market.  A firms’ business can expand through market penetration strategy, market development strategy and product development strategy. 

Market penetration strategy refers to as market share, is a measure of the percentage of sales volume of an existing product or business achieves in relation to the market competition. These can be done by price adjustments, increased promotion, more distribution channels, and for product improvements. 

Then, market development strategy is a business strategy whereby a business attempts to find new groups of buyers as potential customers for its existing products and services. Advantage of market development strategy are it is less expensive than other test methods, faster and restricts access by competitors. The disadvantages is when not considered as reliable and accurate due to the controlled setting. 

Thirdly, product development strategy defines as a product development diversification strategy takes a company outside its existing business and a new product is developed for a new market.

2) Diversification is to allow the company to enter new lines of business that are different from current operations. It is the second form of internal growth strategies. There are four types of diversification, which are, vertical diversification, horizontal diversification, concentric diversification and conglomerate diversification. 

Firstly, vertical diversification is further divided into two categories, which are, backward integration and forward integration. It is also called as vertical integration. In vertical integration new products or services are added which are complementary to the present product line or service. The purpose of vertical diversification is to improve economic and marketing ability of the firm. i) Backward integration occurs when a company produces its own inputs. ii) Forward integration occurs when a firm owns or controls the customers or distribution channels for its main products. 

Secondly, horizontal diversification refers to a strategy of adding related or similar product or service lines to existing core business, either through acquisition of competitors or through internal development of new products or services. 

Thirdly, concentric diversification refers to the addition of similar products or service to an already established business. This diversification strategies are rampant in the food production industry. 

Lastly, Conglomerate diversification is growth strategy that involves adding new products or services that are significantly different from the organization's present products or services. Conglomerate diversification occurs when the firm diversifies into an areas’ totally unrelated to the organization current business.

3) Modernization strategy aimed to development of technology for increase production, improve quality, reduce production costs this strategy carried out in the form of replacing product of old technology that was outdated, antiquated machinery and equipment with new technologies to keep pace with the times.(Çalıpınar, 2006:20).

 

 

 

9. NORHAIME BINTI LINGAM            (BB16110688)

Internal growth strategies is refer to the growth within the the organisation by using internal resource.

1. New Product development : Involves the creation and sale of new products (or services) as a means of increasing firm revenues. In many fast-paced industries, new product development is a competitive necessity. For example, the average product life cycle in the computer software industry is 14 to 16 months.

 2. Other product – related strategies

a.  Improving an Existing Product or Service : Often a business can increase its revenues by simply increasing the quality of an existing product or service.

 b.Increasing Market Penetration: Increasing the sales of a product or service through greater marketing efforts or through increased production capacity.

 c.Extending Product Lines: Making additional variations of a product so it will appeal to a broader range of clientele

d.Geographic Expansion: Growth via expanding to additional geographic locations

3. International Expansion

a. Another common form of growth for entrepreneurial firms. 

b. International new ventures are businesses that, from their inception, seek to derive significant competitive advantage by using their resources to sell products or services in multiple countries. 

c. Although there is vast potential associated with selling overseas, it is a fairly complex form of growth. 

 

• Foreign-Market Entry Strategies
a.Exporting : Producing a product at home and shipping it to a foreign market.

b. Licensing : An arrangement whereby a firm with the proprietary rights to a product grants permission to another firm to manufacture that product for specified royalties or other payments.

c. Joint Ventures : Involves the establishment of a firm that is jointly owned by two or more otherwise independent firms. – Fuji-Xerox is a joint venture between an American and a Japanese company. 

d. Franchising : An agreement between a franchisor (a company like McDonald’s Inc., that has an established business method and brand) and a franchisee (the owner of one or more McDonald’s restaurants). 

e. Turnkey Project : A contractor from one country builds a facility in another country, trains the personnel that will operate the facility, and turns over the keys to the project when it is completed and ready to operate. –
f. Wholly Owned Subsidiary : A company that has made the decision to manufacture a product in a foreign country and establish a permanent presence.

 

It refers to raising the market share, sales revenue and profit of the present product or services. The business can be expanded through product development, market development, expanding the line of product. Expansion leads to better utilization of the resources and to face the competition efficiently. Business expansion provides economics of large scale operations.

Business can be expanded through market penetration strategy.This strategy involves selling existing products to existing markets. To penetrate and capture the market, a firm may cut prices, improve distribution network, increase promotional activities.

Market development strategy this strategy involves extending existing products to new market. This strategy aims at reaching new customer segments or expansion into new geographic areas. Market development aims to increase sales by capturing new market area.

Product development strategy involves developing new products for existing markets or for new markets. Product development means making some modifications in the existing product to give value to the customers for their purchase.

 

The second is diversification as it is another form of internal growth strategy. The purpose of diversification is to allow the company to enter new lines of business that are different from current operations. There are four types of diversification vertical diversification, horizontal diversification, concentric diversification, conglomerate diversification.

 

There are four types of diversification which is vertical diversification. It is also called as vertical integration. In vertical integration new products or services are added which are complementary to the present product line or service. The purpose of vertical diversification is to improve economic and marketing ability of the firm. Vertical diversification includesbackward integration which means the company expands its business activities in such a way that it moves backward of its present line of business. For instance, despite of being the leaders in Textiles, to strengthen his Position, Dhirubhai Ambanidecided to integrate backwards and produce fibres.

Other than that, is forward integration, in forward integration, the company expands its activities in such a way that it moves ahead of its present line of business. For example, in New Zealand based Natural health care products company Comvitapurchased its Hong Kong distributor Green Life Ltd. And thus achieved forward integration by having access to greenlife’sretail stores, sales staff and in store promoters.

 

Horizontal diversification involves addition of parallel products to the existing product line. For example, a company, manufacturing refrigerator may enter into manufacturing air conditioners. The purpose of horizontal diversification is to expand market area and to cut down competition.

When a firm diversifies into business, which is related with its present business it is called concentric diversification. It is an extreme form of horizontal diversification. For example, a car dealer may start a finance company to finance hire purchase of cars.

When a firm diversifies into business, which is not related to its existing business both in terms of marketing and technology it is called conglomerate diversification. It involves totally a new area of business. There is no relation between the new product and the existing product.

 

A. Expansion: 

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Business expansion refers to raising the market share, sales revenue and profit of the present product or services. The business can be expanded through product development, market development, expanding the line of product etc.

Expansion leads to better utilisation of the resources and to face the competition efficiently. Business expansion provides economics of large-scale operations.

Business can be expanded through:- 

a. Market penetration strategy: 

This strategy involves selling existing products to existing markets. To penetrate and capture the market, a firm may cut prices, improve distribution network, increase promotional activities etc.

b. Market Development strategy: 

This strategy involves extending existing products to new market. This strategy aims at reaching new customer segments or expansion into new geographic areas. Market development aims to increase sales by capturing new market area.

c. Product Development strategy:

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This strategy involves developing new products for existing markets or for new markets. Product development means making some modifications in the existing product to give value to the customers for their purchase.

B. Diversification: 

Diversification is another form of internal growth strategy. The purpose of diversification is to allow the company to enter new lines of business that are different from current operations. 

a) Vertical diversification is also called as vertical integration. In vertical integration new products or services are added which are complementary to the present product line or service. The purpose of vertical diversification is to improve economic and marketing ability of the firm.

b) Horizontal Diversification: 

Horizontal diversification involves addition of parallel products to the existing product line. For example: A company, manufacturing refrigerator may enter into manufacturing air conditioners. The purpose of horizontal diversification is to expand market area and to cut down competition.

c) Concentric diversification: 

When a firm diversifies into business, which is related with its present business it is called concentric diversification. It is an extreme form of horizontal diversification. For example: Car dealer may start a finance company to finance hire purchase of cars.

d) Conglomerate diversification: 

When a firm diversifies into business, which is not related to its existing business both in terms of marketing and technology it is called conglomerate diversification.

It involves totally a new area of business. There is no relation between the new product and the existing product.

II. External Growth Strategies: 

Foreign Collaboration: 

Collaboration means cooperation. It means coming together. Collaboration is the act of working jointly. It is a process where two people or organisation comes together for the achievement of common goal.

With the advent of globalisation, foreign trade and foreign investments are encouraged to increase the volume of trade. This concept gave rise to foreign collaboration to acquire expertise in the manufacturing process, gain technical know-how and market or promote the products or services to the foreign countries.

Foreign collaboration is an agreement or contract between companies or government of domestic country and foreign country to achieve a common objective. Foreign collaboration is a business structure formed by two or more parties for a specific purpose.

It is collaboration where the domestic firm and the foreign firm join hands together to achieve a common goal. Foreign collaboration helps in removing financial, technological and managerial gap in the developing countries. It is recognised as an important supplement for development of the country and for securing scientific and technical know-how.