issue 1 - Roland Berger

The formula for growth DOSSIER #01
Ways to achieve growth
COMPANIES HAVE A CHOICE: EITHER THEY EXPAND IN A SELF-PROPELLED FASHION, BY MEANS OF ACQUISITION, OR THROUGH FLEXIBLE
PARTNERSHIPS AND ALLIANCES. PICKING THE RIGHT STRATEGY DEPENDS ON RESOURCES AND THE CURRENT MARKET SITUATION.
[INTERNAL GROWTH] While companies that
decide to approach expansion by their own
muscle avoid the risks of a merger or building
networks, they can rarely benefit from exceptionally
large growth spurts. It is therefore
especially imperative to increase operating efficiency
in all business activities. Only this way
provides the generation of free cash flow that
can finance investments and new growth.
[EXTERNAL GROWTH] Size can be bought, even
if it is only at the price of greater risk most of
the time. Companies do experience a growth
spurt through acquisitions and can undertake
globalization projects faster, tap new markets
or adjust to established ones. However, experience
shows that integration expenses are usually
underestimated: 50 to 70 percent of all
mergers are considered failures.
[GROWTH THROUGH NETWORKS] Virtual size
helps balance out growth limitations while
avoiding the unknowns associated with mergers.
Companies that organize into networks
and partnerships profit from the improving
opportunities to steer the agreed-upon distribution
of functions through IT system capabilities.
In the past decade’s fast-growing markets, network
development was a primary growth driver.
The six basic growth strategies
THE “V-CURVE” IS NO MORE: TO BE SUCCESSFUL, MODERN COMPANIES MUST REORGANIZE AND GROW AT THE SAME TIME.
ALL SIX GROWTH STRATEGIES POINT TO THE PARALLEL BETWEEN EXPANSION AND INCREASING EFFICIENCY.
[GLOBALIZATION] [MARKET SHAKEOUT] [OUTSOURCING] [NETWORK BUILDING] [CUSTOMER ORIENTATION] [INNOVATION]
New
markets
Factor
cost
advantages
Marketshare
gains
Economies
of scale
Focus on
core
competencies
Fixed-costs
reduction
Access
to new
markets
Adjustment
of size
disadvantages
Service
and
retention
Savings
in gaining
customers
Differentiation,
edge
Process
innovation
[STRATEGY] With every basic strategy, the goal is to initiate growth and at the same time establish competitive cost structures. For this purpose,
management should consider three fundamental rules: First, leadership must define the goal and position the company in comparison with the
competition. Then, the relevant business drivers of every sector must be identified. Finally, by using an opportunities-and-risks assessment, it
must be determined which goals can reached how and within what time period. The splitting-up of these rules into a concrete time-and-measures
plan is a great challenge for most companies, according to surveys conducted by Roland Berger Strategy Consultants.
think: act 29