Strategy Development 2 / 6

This can be done INTERNALLY, through ACQUISITIONS or via an ALLIANCE

Internal Development

Often called 'Organic growth'

  1. Build on company's core competencies

  2. Suits a Risk-averse culture

  3. Easier to Control & Manage

  4. Slow

  5. Growth restricted by own competencies

  6. Better for growth at home rather than abroad

Acquisition & Mergers

  1. Fast to new markets

  2. Gains new competencies

  3. High risk due to initial costs

  4. Funding problems of initial costs

  5. Problems with cultural fit

Strategic Alliances

2+ businesses share resources to pursue a strategy

  1. No large initial costs

  2. No cultural fit problems

  3. Specialise on each businesses own competencies

Types of STRATEGIC ALLIANCE

  • Joint Venture 

    A new organisation is set up

    Both venturers put in resources

    Formal & slow

  • Licence agreement

    Allow others to use your resources in a new market

    Less Control

    If successful the other venturer may then develop their own and thus not need the licence

    Needs little initial costs

    Needs trust and cope ration