Introduction
This model is similar in some
respects to the well-established Ansoff Model.
However, it looks at growth strategy from a slightly different perspective.
The McKinsey model argues that
businesses should develop their growth strategies based on:
• Operational skills
• Privileged assets
• Growth skills
• Special relationships
• Privileged assets
• Growth skills
• Special relationships
Growth can be achieved by looking at business opportunities along several dimensions, summarised in the diagram below:
• Operational skills are the “core competences” that a business has which can provide the foundation for a growth strategy. For example, the business may have strong competencies in customer service; distribution, technology.
• Privileged assets are those assets
held by the business that are hard to replicate by competitors. For example, in
a direct marketing-based business these assets might include a particularly
large customer database, or a well-established brand.
• Growth skills are the skills that
businesses need if they are to successfully “manage” a growth strategy. These
include the skills of new product development, or negotiating and integrating
acquisitions.
• Special relationships are those
that can open up new options. For example, the business may have specially
string relationships with trade bodies in the industry that can make the
process of growing in export markets easier than for the competition.
The model outlines seven ways of
achieving growth, which are summarised below:
Existing products to existing
customers
The lowest-risk option; try to
increase sales to the existing customer base; this is about increasing the
frequency of purchase and maintaining customer loyalty
Existing products to new customers
Taking the existing customer base,
the objective is to find entirely new products that these customers might buy,
or start to provide products that existing customers currently buy from
competitors
New products and services
A combination of Ansoff’s market
development & diversification strategy – taking a risk by developing and
marketing new products. Some of these can be sold to existing customers – who
may trust the business (and its brands) to deliver; entirely new customers may
need more persuasion
New delivery approaches
This option focuses on the use of
distribution channels as a possible source of growth. Are there ways in which
existing products and services can be sold via new or emerging channels which
might boost sales?
New geographies
With this method, businesses are
encouraged to consider new geographic areas into which to sell their products.
Geographical expansion is one of the most powerful options for growth – but
also one of the most difficult.
New industry structure
This option considers the
possibility of acquiring troubled competitors or consolidating the industry
through a general acquisition programme
New competitive arenas
This option requires a business to
think about opportunities to integrate vertically or consider whether the
skills of the business could be used in other industries.
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