Types of SME Growth Strategies Essay Example

only products and markets as major risk assessment factors, it provides a fresh and straightforward approach to addressing growth risks for any high-turnover organization. Importantly, the matrix is based on the idea that the best growth strategy can be derived from the decision to sell either a new or existing product in a new or existing market. Figure 4 depicts the Ansoff Matrix grid.

Figure 4: The Ansoff Matrix

According to the Ansoff Matrix (figure 4), the risks increase as a business transitions from one quadrant to another. The market penetration quadrant is seen as the least risky, while the diversification segment is perceived as the most risky (Bachmeier, 2013). Each of these four quadrants corresponds to a different organizational status in terms of market and products, and each is linked to various growth strategies that are subject to different risks and opportunities (Moussetis, 2011).

O Market Penetration

The strategy aims to reduce risks by concentrating on selling the same product or service in the same market (Bachmeier, 2013). This approach involves maintaining sales within the market, which typically has a steady growth rate

(Moussetis, 2011)

. To accomplish this, the company can introduce loyalty programs and promotions to retain and attract customers, acquire a competitor in the same market, or make production decisions based on turnover.

O Market Development

This strategy involves selling the same product in a new market, whether it be foreign or local. The company has the option to sell through direct or online sales channels, as well as segmenting the market by age, demographics, or gender (Bachmeier, 2013; Moussetis, 2011).

O The Strategy for Product Development

This strategy focuses on introducing

a new product into a current market. A company may choose to repackage or create a variation of an existing product in order to boost sales (Bachmeier, 2013). The service sector, including wedding industries, can enhance the quality of their services and improve delivery time.

ØDiversification

When introducing new products/services in new markets, there are risks involved as it limits the initial expertise and economies of scale (Bachmeier, 2013). However, this strategy has the advantage of improving operational opportunities even if one venture fails. Diversification is often achieved through mergers and acquisitions (Thakor, 2011).

2.3.3.4.3 The Strategy of Miles and Snow

The Prospector-Analyzer-Defender-Reactor strategy, also referred to as the Prospector-Analyzer-Defender-Reactor strategy (Kess & Isoherranen, 2014), is a strategic approach that focuses on addressing the challenges of entrepreneurial, engineering, and distribution administration within a business organization. These challenges have an impact on various aspects of the organization including technological choices, organizational structure and policies, and the product-market framework. The foundation of this strategy lies in how the organization deals with these challenges.

According to Kess and Isoherranen (2014), there are four major responses that can be classified as part of this strategy.

u

Defenders

– These organizations face the entrepreneurial challenge best in stable business environments. Their competition revolves around product or service stability, and they prioritize the quality and price of what they offer to the market.

u Prospectors - this group of industries also faces entrepreneurial challenges. However, their main challenge lies in product-market preferences, leading these organizations to primarily concentrate on developing new commodities or offering new services in addition to expanding into new markets.

u Analyzers - The entrepreneurial challenges that affect both the prospectors and

the defenders greatly impact the analyzers. These industries strive to maintain sales in their current markets while also seeking to develop new products and enter new markets.

u Reactor is an organization that primarily reacts to problems rather than actively preventing them. They only develop strategies when faced with challenges, relying on the specific situation at hand. This approach is generally considered insufficient for today's modern businesses.

The strategies will undergo a critical review.

Both the Ansoff Matrix strategy and Miles and Snow's Strategy are grounded in product and market factors within the business environment (Bachmeier, 2013; Blackmore and Nesbitt, 2012). Nevertheless, these approaches solely offer superficial solutions without taking into account internal and external influences on businesses, including financial strategies. Consequently, they may have restrictions for specific organizations.

The Mintzberg et al. strategies provide a useful framework for addressing the various challenges a business may face due to external and internal factors, depending on the desired outcome for the organization (Mintzberg et al., 2003). However, these strategies are not simplified and lack a specific methodology for implementation; they are rather broad in nature.

Summary: Most organizations can apply three strategies (Mintzberg et al., Ansoff Matrix, and another one), each with its own strengths and weaknesses. By combining these strategies, an organization can develop a more effective growth strategy.