Strategies of internal growth and external growth
Growth is one of the objectives of the business and a way of expressing their success. Companies can grow in two ways: internal and external growth GROWTH.
Known as internal growth of this company is based on productive investments within the company, thus increasing their productive capacity.
We can distinguish:
– Market penetration involves increasing sales of the company in the current market with current products. For example, we sell televisions in Spain and do a promotion to give away a small TV when you buy a large.
– Product development : an improved in markets in which the company is offering this product. For example, TVs with Freeview, hairdryer, etc …
– Market development : This is to introduce our products into new markets. For example, we sell televisions to China, which is a new market where never sold them.
– Diversification : involves selling products or services very different to what is our core business. For example, our company is manufacturing televisions and assemble a chain of bars.
external growth is based on the provision of resources for non-business organizations.
We Can Distinguish:
– Fusion : is the solution of two or more companies and their respective assets to a new company. For example, Iberia and British Air Ways.
– Absorption occurs when a company buys assets of another or others and integrating it into your own. For example, BBVA and Banesto and Vosbagen.
– Participation: is to buy a portion of the shares of another company to influence it. For example, all banks involved in large companies.
– Cooperation : is an agreement between different companies through which they try to join forces and take advantage arising from act together.
A very important form of cooperation are franchises . This contract allows a small business to take advantage of economies of scale in purchasing group, promotion and brand recognition and large group allows you to increase your income without incurring any investment and collection of canons.