Assessing growth opportunities involves planning new businesses, downsizing, or terminating older businesses. The company's plans for existing businesses allow it to project total sales and profits.
If there is a gap between future desired sales and projected sales, corporate management will have to develop or acquire new businesses to fill it by looking at four options:
(i) To identify opportunities to achieve further growth within current businesses (intensive opportunities) A new intensive growth opportunities called a "product-market expansion grid". The company first considers whether it could gain more market share with its current products in their current markets (market penetration strategy).
Next it considers whether it can find or develop new markets for its current products (market-development strategy). Then it considers whether it can develop new products of potential interest to its current markets (product-development strategy).
Later it will also review opportunities to develop new products for new markets (diversification
strategy).
(ii) To identify opportunities to build or acquire businesses that are related to current businesses (integrative opportunities) A business's sales and profits may be increased through backward, forward, or horizontal integration within its industry.
(iii) To identify opportunities to add attractive businesses that are unrelated to current businesses (diversification opportunities).
A good opportunity is one in which the industry is highly attractive and the company has the right mix of business strengths to be successful.
(iv) Companies must not only develop new businesses; they must also carefully prune, harvest, or divest tired old businesses in order to release needed resources and reduce costs.
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