Growth platforms are specificly named initiatives selected by a business organization to fuel their revenue and earnings growth.
Growth platforms may be strategic or tactical. Strategic growth platforms are longer term initiatives where the initiative and results span multiple years—usually from 3 to 6 years. Figure 1 Generic examples of commonly selected strategic growth platforms are pursuing specific and new product areas, or entry into new distribution channels. Illustrative examples are:
- Apple Computer's targeting of "personal music systems" to accelerate growth faster than with only its personal computer business.
- IBM's coining of the term "e-business," and its subsequent use as the organizing theme for all that the company did in the late 1990s.
Types of Strategies
There are a number of different strategies, but the most common are:
- Horizontal integration
- Vertical integration
Horizontal integration occurs when a firm is being taken over by, or merged with, another firm in the same industry and in the same stage of production as the merged firm, e.g., a car manufacturer merging with another car manufacturer. This process is also known as a "buy out" or "takeover." The goal of horizontal integration is to consolidate like companies and monopolize an industry. Figure 3
Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need.
Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry that the business already exists in. At the corporate level, it is generally very interesting to enter a promising business outside the scope of the existing business unit.
Diversification is part of the four main growth strategies defined by the Product/Market Ansoff matrix [Ansoff, I.: Strategies for Diversification, Harvard Business Review, Vol. 35 Issue 5,Sep-Oct 1957, pp. 113-124]. Figure 2
Other Product / Market Types
Market penetration is another of the four growth strategies of the Product-Market Growth Matrix as defined by Ansoff. Market penetration occurs when a company penetrates a market in which current products already exist.
Market Development Strategy
Market development strategy entails expanding the potential market through new users or new uses for a product. New users can be defined as new geographic segments, new demographic segments, new institutional segments, or new psychographic segments. Another way to expand sales is through new uses for the product.
New Product Development
In business and engineering, new product development (NPD) is the complete process of bringing a new product to market. A product is a set of benefits offered for exchange and can be tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief).