Internal growth strategies

4.5.1 Internal growth strategies

Should City Lodge Hotel or any other organisation decide that they want to grow the business to ensure sustainable profitability, it can consider internal growth strategies. These strategies are usually relatively low in risk as the organisation keeps its focus on what it does well already. One such internal growth strategy is called a `concentration growth strategy’. This strategy implies `sticking to the knitting’. It involves concentrating on improvement Should City Lodge Hotel or any other organisation decide that they want to grow the business to ensure sustainable profitability, it can consider internal growth strategies. These strategies are usually relatively low in risk as the organisation keeps its focus on what it does well already. One such internal growth strategy is called a `concentration growth strategy’. This strategy implies `sticking to the knitting’. It involves concentrating on improvement

A concentration growth strategy can be accomplished by attracting new customers, increasing the consumption rate of existing customers, or `poaching’ from the competition. The City Lodge hotel group can offer their business travellers a package where they can

bring their spouses with them to minimal additional fee. This is a low-risk strategy as the hotel group is familiar with the service they provide, and know their market and the technology that they use to provide the accommodation service.

Concentration

Market development

development Grand

strategies Decline Innovation Diversification

External Corporate

combination Integration

Figure 4.9: Grand strategies

The core components of a mission statement are:  Product,

 Market;  Technology

The four internal growth strategies discussed in this section focus on changing one of the core components. For instance, if the strategy focuses on the product, the strategy is called

`product development ‘. If the strategy focuses on the market, the strategy is called market development ’.

Known skills and capabilities are major advantage in this low-risk strategy. However, organisations choosing this strategy are susceptible to new competitors and innovations. City Lodge Hotels also have to compete with so- called `boutique hotels’ – a new type of `designer’ hotel. If City Lodge Hotels keep on focusing their current product, current market and current technology – the three core components of a mission statement – they will have to ensure that their strategy will enables them to grow in the future.

Market development is a second internal growth strategy that can be considered by an organisation that wants to grow, but still focus on what they are currently doing. Market development is closely related to a concentration strategy. The market development strategy also builds on existing strength and skills. Market development is a strategy according to which an organisation sells it present products in new market by opening

additional new outlets or attracting other market segments. Protea Hotels’ decision to manage a hotel in Ghana is an example of market development. Another example of this

strategy would be a university designing non-degree courses for students who wish to obtain a professional qualification but do not want to study full time.

A third internal growth strategy that can be considered by an organisation who feels that they want to compete in the arena that they know well is called `product development’. Product development implies modification of existing products or addictions to present products to increase market penetration within existing customer groups. Toyota chose this strategy when they introduced to Toyota Prius hybrid car that runs on petrol and electricity. Nissan followed with their Nissan Leaf which is already being pre-booked by thousands of customers who insist on owning and driving environment-friendly cars.

While the first three internal growth strategies discussed here are relatively low in risk, the fourth internal growth strategy, namely `innovation’ is a riskier strategy. Organisations

choosing this strategy continuously search for original or novel ideas. A concentration strategy can focus on creating innovative products, or on creating new way of getting their products to the market, or on designing new processes, or it could focus on any other area in which they can innovate. The first bank that made cell phone banking possible, chose an choosing this strategy continuously search for original or novel ideas. A concentration strategy can focus on creating innovative products, or on creating new way of getting their products to the market, or on designing new processes, or it could focus on any other area in which they can innovate. The first bank that made cell phone banking possible, chose an

Internal growth strategies comprise

 Concentration strategies;  Product development strategies;  Market development strategies;  Innovation strategies.