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Chapter 14 Strategies for Firm Growth Bruce R. Barringer R. Duane Ireland Chapter Objectives
14-2 Chapter Objectives
14-3 Internal and External Growth Strategies 14-4 Involve efforts taken within the firm itself, such as new product development, other product related strategies, and international expansion. Internal Growth Strategies Rely on establishing relationships with third parties, such as mergers, acquisitions, strategic alliances, joint ventures, licensing, and franchising. External Growth Strategies Internal and External Growth Strategies 14-5 Internal Growth Strategies 14-6 Other product- related strategies Advantages and Disadvantages of Internal Growth Strategies 14-7 Advantages Disadvantages
strategy can be difficult to recoup.
New Product Development
14-8 New Product Development 14-9 Keys to Effective New Product and Service Development
New Product Development 14-10 Common Reasons That New Products Fail
Other Product Related
Strategies 4-11 Product Strategy Description Improving an Existing Product or Service Increasing Market Penetration Often a business can increase its revenues by simply increasing the quality of an existing product or service. Increasing the sales of a product or service through greater marketing efforts or through increased production capacity. Other Product Related Strategies 4-12 Product Strategy Description Extending Product Lines Geographic Expansion Making additional variations of a product so it will appeal to a broader range of clientele. Growth via expanding to additional geographic locations . International Expansion
14-13 International Expansion
14-14 International Expansion
14-15 External Growth Strategies 14-16 Licensing Strategic Alliances and Joint Ventures Advantages and Disadvantages of External Growth Strategies 14-17 Advantages Disadvantages
Mergers and Acquisitions
14-18 The Process of Competing an Acquisition 14-19 Licensing
14-20 Licensing 4-21 Type of Licensing Description Technology Licensing Merchandise and Character Licensing The licensing of proprietary technology that the licensor typically controls by virtue of a utility patent. The licensing of a recognized trademark or brand that the licensor typically controls through a trademark or copyright. Licensing 4-22
represented a major source of revenue for Pixar in its early years.
and Dory from Finding Nemo, adorn products as diverse as dinner plates and sleeping bags. Strategic Alliances
14-23 Strategic Alliances 4-24 Type of Alliance Description Technological Alliances Marketing Alliances Feature cooperation in R&D, engineering, and manufacturing. Typically match a company with excess distribution capacity with a company that has a product to sell. Joint Ventures
14-25 Joint Ventures 4-26 Type of Joint Venture Description Scale Joint Venture Link Joint Venture Partners collaborate at a single point in the value chain to gain economies of scale in production or distribution. Positions of the partners are not symmetrical, and the partners help each other access adjacent links in the value chain. Advantages and Disadvantages of Participating in Strategic Alliances and Joint Ventures 14-27 Advantages Disadvantages
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall Which of the following statements is not true regarding new product development?In general, developing new products is a low-risk strategy is not a true statement.
Which mechanism for firm growth involves the creation and sale of new products or services?The correct answer is B.
New product development can be defined as the process of introducing new products or services to the marketplace. The new product development process involves a series of stages that help create, test, and verify new products in the market.
Which of the following organizational growth strategies involves the creation of new products?Horizontal diversification
This involves the purchase or development of new products by the company, with the aim of selling them to existing customer groups. These new products are often technologically or commercially unrelated to current products but that may appeal to current customers.
Which of the following is an advantage of acquisitions as a growth strategy?An acquisition can help to increase the market share of your company quickly. Even though competition can be challenging, growth through acquisition can be helpful in gaining a competitive edge in the marketplace. The process helps achieves market synergies.
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