Valery Lascaux, Ph.D., associate professor of the Moscow Automobile and Road Institute (State Technical University).
The development of business activity of the company (the company) is determined by the following factors: which markets it operates, ie earned it the market or it is for her new, and with what kinds of goods or services, it goes on the market (products that are new to this market or not).
The practice of market relations has developed several basic areas that form the active behavior of firms.
Expansion of activity of the company (the company), "deep", ie segmentation of existing markets in order to capture their products new groups of consumers.
Expansion of activity of the company (the company) "breadth", ie diversification of production through the production of new goods (items) as related to the basic profile of the enterprise, and is not associated with it.
Expansion of activity by "quantitatively" - growth in sales by increasing the scale of production unchanged product line for the current market.
Expansion of activity by "cross-border", ie provision of increase in output by entering new markets.
Typically, these strategies are presented in the form of a matrix constructed depending on the product and the market (Table 1).
Table 1. The matrix of the basic strategies
Old Market
New market
Commodity old
Field A1: Running out of product and market opportunities
Field A2: Development of new markets. New Market Segmentation
New article
Field B1: Penetration into niches with new or improved products
Field B2: Diversification of markets and products
For the field A1 typical strategy of deep penetration ("old" product - the "old" market). This strategy is successful when the market is not yet saturated. Competitive advantage a firm can achieve by reducing production costs and selling prices of services.
For a field of characteristic A2 strategy to expand the market (the 'old' product - the "new" market). When using this strategy firm tries to increase sales of their products (services) to new markets or new segments of the market available.
For the B1 field is characterized by the development strategy of product ("new" product "- the" old "market). This strategy is effective in creating new versions of existing products to markets.
For the field B2 is characterized by a diversification strategy (the "new" product - the "new" market). This strategy is used to eliminate the dependence of the company on the production of a particular product (service), or from some of the market.
The base of the company's growth strategy and determine the main types of strategies strategic business units, of which there are three main types.
The strategy of the offensive (attacking) - the strategy of conquest and expansion of market share.
Strategy Defense - The strategy for retaining existing market share.
The strategy of retreat - a strategy to reduce its market share to earnings growth as a result of a gradual withdrawal from the market or liquidation of the business.
The use by a particular type of strategy is determined by the position of the firm in the market, which is characterized by its market share (in percent). Depending on market share are following the situation of the company and its strategy:
1. The leader (market share - 40%) felt confident, first takes the initiative in the prices of new products. In defense of the leader resorted to a variety of actions:
"Defense position" - the leader creates barriers (pricing, licensing) on the main directions of attack competitors;
"Flank defense" - the leader identifies the key areas put forward as a fortified point for active defense and counterattack;
"Preemptive defense" - the leader organizes advancing opponent using specific signals, neutralizing the attack, such as spreading information about the upcoming price drop;
"Counter-offensive" - after the leader pauses, and then hits the weak spot competitor, for example shows the reliability of its product and unreliable nodes competitors' products;
"Mobile defense" - the leader is expanding its influence in the diversity of production, identifying the underlying needs of customers;
"Squeezing defense" - the leader leaves the weak segments of the market while strengthening the most promising.
2. Contender for the leadership (market share - 30%) feels confident only if attacked first. Different variants of attacks:
"Frontal attack" has many dimensions (the new products and prices, advertising, and sales) and requires considerable resources;
"Environment" - an attempt to attack all or a significant share of the market leader of the territory;
"Bypass" - the transition to the production of innovative products, new market development or implementation of the jump in technology;
"Guerrilla attack" - small jerky attack is not quite correct methods to demoralize the opponent.
3. Follower or driven (market share - 20%) - this role is to follow the leader at a distance, saving manpower and money.
4. Beginner (entrenched in the niche market) (market share - 10%) - with this role are beginning to novices. It's the search market "niche" quite satisfactory size and profitability.
Growth strategies can be implemented by means of:
expand sales of products in order to better utilize the potential of the market;
out with new products to established markets;
exit has already produced products to new and unexplored markets;
diversification;
the acquisition of new businesses;
out with new products to new markets.
It should be noted that the least risky is to expand the sales of goods already produced. Then comes out with new products to old markets and access to the old products to new markets. The most risky is out with a new product in a new market.
Growth strategy is focused on the use of opportunities provided by the market. Work with the old product in the old market does not require new knowledge and skills or in marketing or in the field of technology. Therefore, the strategy of expanding sales of the discharged product is already involved markets subject to minimal risk.
At the same time, this strategy is difficult to realize in developed markets repositories maturity. This is due to the fact that the expansion of sales in mature markets requires weaning customers away from competitors. The conquest of a true competitor buyers may require significant financial costs.
A little more risky is the output from the already available product to new markets. Such withdrawal may require additional investments in order to carry out promotional campaigns and product adaptation to the new requirements. New markets also requires significant marketing research to identify new needs and tastes of consumers.
New product development requires the addition of significant financial investments also purchase licenses, permits the production and various activities. Additional requirements for financial resources together with an unknown reaction of consumers to new products bring new risks.
Diversification (entering new markets with new products) is the most risky strategy for growth, as here the risk of development of new products combined with the risk of entering new markets.
Growth strategies of small firms
The main feature of the development of small firms in the market environment is their flexibility, ie ability to quickly rebuild its industrial activity, depending on the market situation. The basic strategy of behavior of small firms are represented in the matrix.
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