Substantive growth will increase the wealth of the business and help the business to fund its future projects from the wealth coming from growth. Te wealth coming from the substantive growth is also helpful and considerable when a business carries out strategic evaluation and selection. Wth these strategies the business can become strong and competitive with a large market share. Wen larger businesses achieve substantive growth, i is not only beneficial for the company but also for the society in a social perspective. Sbstantive growth can help the business set the priorities and fulfill the strategies by implementing them step by step (Sekhar, 2009, pIn contrast, te retrenchment strategy in business is a strategy where the business cuts down the operational activities being carried out in order to become financially stable.
Te business would back out from certain markets and cut down expenses by reducing diversity and the size of the overall business. Te goal is to achieve a beneficial turnaround to ensure the application of suitable strategies. Tis also helps the business to look at the future and opportunities for the business and then evaluate the strategies.
Tis strategy must be beneficial for the business when it reaches a stage where it is not financially stable, to much debt and too little funds to pay them off. O various occasions, te businesses need to adopt certain alternative strategies to limited growth, sbstantive growth and retrenchment. Tese alternative strategies to limited growth are market penetration, mrket development and product development. Aternative strategies to substantive growth are horizontal integration, rlated diversification, vrtical integration and unrelated diversification. Srategic alternatives retrenchment are turnaround and divestment.
Te market penetration strategy is a strategy which allows the business to lower the price for the product which is initially promoted in the targeted market. Trough this the business can achieve more sales revenue through limited products in a defined market. Mrket development is a low risk strategy which is based on the strategy of specialization where a business specializes in a product, icreases its range and applies possible modifications to reach customers in the specified market area. Poduct development is the strategy which a business modifies its existing...
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