Strategic Management: Formulation and Implementation

Implementation Of Growth Strategy

A company can grow in three fundamental ways, and all companies must choose among these options.

These growth options should match the right strategic and operational "fit" to the right structure.

There are three modes of organization: internal, extended, and external.

The Strategic Spectrum

For strategists often the first question is "How do we structure the structure this deal?" Researchers found too many failed joint ventures and acquisitions where the deal should have been structured as a simple licensing agreement, or as a contracting manufacturing agreement, or as a basic strategic alliance.

One of the central reason for the wrong choice of structure is an inadequate method of conceptualizing organizational form to match corporate strategy.

The strategic spectrum is a very valuable tool. It groups various business structures into families with similar characteristics, and it guides the strategist into easy transitions from one structure to the next. The strategic spectrum was created which groups all structural options into a range of related forms, from "external" relationships to "extended" alliances to "internal" organizations.

The understanding of the strategic spectrum can be put into another perspective when we examine the way in which a company progresses through its stages of growth. Form example, a small, local business typically begins expanding internally, perhaps establishing vendors and a network of sales representatives. As the company continues to grow, it might license its proprietary process in return for cash to fund its expansion.