MG 495 Final question and answer

Question 1 Not yet graded / 25 pts Discuss the two basic growth strategies. Your Answer: Growth strategies are the most widely pursued corporate directional strategies because they are designed to increase sales, profits, assets, or a combination of all three. Two basic growth strategies include CONCENTRATION growth and DIVERSIFICATION growth. Concentration includes vertical and horizontal growth. Vertical Growth - can be achieved by taking over a function previously provided by a supplier or distributor. The company, in effect, grows by making its own supplies and/or by distributing its own products. Horizontal Growth - A firm can achieve horizontal growth by expanding its operations into other geographical locations and/or by increasing the range of products and services offered to current markets. Diversification includes concentric and conglomerate. Concentric diversification into a related industry may be a very appropriate corporate strategy when a firm has a strong competitive position but industry attractiveness is low. Conglomerate diversification is when management realizes that the current industry is unattractive and that the firm lacks outstanding abilities or skills that it could easily transfer to related products or services in other industries.