Archana

Lingraj
Abid hussain Prabuling

Ranjan Tiku
Shivan Gouda Jehangir Salam

Hima bindu
Altaf

GROUP 8

New business ventures -high risk activity Risk of failure - 40% in first year & 90% over ten years Mortality rate of new ventures is higher than established

businesses. Lack of organizational inertia & stability

 Probability that a firm will become insolvent and be

unable to recover. Taken over by another firm such that the initial team loses control.

 Uncertainty Risk Inaccuracy of figures

 The process or product becoming obsolete

Decline in demand for the product Change in government policies about business

Price fluctuations
Foreign exchange restrictions Inflationary tendencies

Uncertainity can be managed in two ways

By applying modern quantitative techniques such as System analysis , Market research, Operations research, Network analysis. By using some techniques for handling risk at the capital investment appraisal stage.

 Shorter payback period

Sensitivity analysis
Probability analysis

To select or reject a proposal following criteria is adopted:

Select the least risky proposal Avoid proposals with fluctuating returns Apply hurdle rates

i.

ii.

Risk relating to errors of forecasting. Risks relating to factors external to enterprise.

Marketing Risks can be minimized by:

long term contracts with suppliers and customers collaboration with other producers for specializing in certain products or geographical areas. Diversifying into certain related and unrelated products.

 It denote various type of business activities that make up the

total operations of the enterprise. The firm must depend less on the core business and for the sake of growth and development it should depend on new market and new products.
Strategic options can be:

1. New markets for existing products

2. New products for existing markets

The basic idea behind this approach: To reduce the risks of overdependence on a particular market. Ensuring optimum utilization of technological and production facilities. Eg: Initially, Rasna Soft Drink concentrate was confined to Mumbai market alone and thereafter it spread its market operations to entire Maharashtra, entire country and now different countries of the world.

This the another way of concentrating on the particular target market by not depending on a single product but to develop a product mix of closely related products . Eg: Singer company in India started its operations with sewing machine but today its product range includes toaster, grinder, mixer, microwave oven etc

(1) MARKET SCOPE STRATEGIES. (2) IMITATION STRATEGIES.

The basic kinds of market measurement are: 1. Absolute market potential. 2. Relative market potential. 3. Industrys and the companys sales forecasts.
MARKET SCOPE STRATEGY

NARROW SCOPE

BROAD SCOPE

 Imitation is another strategy for minimizing the risk of

downside loss associated with new entry. Imitation involves copying the practices of other firms whether those firms are in industry being entered or from related industry. It helps in quickly acquiring the skills that will be rewarded by the industry.
IMITATION STRATEGIES

Franchising

MEE TOO

Growth Strategy refers to a strategic plan formulated and implemented for expanding firms business.

Organic / Internal Growth Strategy Intensive growth Diversification Modernization

Inorganic / External Growth Strategy Merger Joint Ventures

INTENSIVE GROWTH STRATEGY (Expansion) Intensive growth strategy or expansion involves raising the market share, sales revenue and profit of the present product or services. The firm slowly increases its production and so it is called intensive growth strategy. It is a good strategy for firms with a smaller share of the market. Three alternative strategies are available in this regard. Market Penetration Market development Product development

Products markets present

present

new

Market penetration (penetrate existing markets with existing products)

Product development (introduce new products in existing markets)

new

Market development (enter new markets with existing products)

Diversification (introduce new products in new products)

 Entering new industries

Related diversification
Unrelated diversification Divestiture & liquidation

Corporate turnaround, retrenchment & restructuring

 HORIZONTAL INTEGRATION VERTICAL INTEGRATION

(a) Backward integration (b) Forward integration

CONCENTRIC DIVERSIFICATION-adding new, but

related products
CONGLOMERATE DIVERSIFICATION-adding new

unrelated products

A firm may use the strategy of modernization to achieve growth. Modernization basically involves up gradation of technology to increase production, to improve quality and to reduce wastages and cost of production. The worn-out and obsolete machines and equipment are replaced by the modern machines and equipment.

 MERGER

Merger can occur in two ways:

*ACQUISATION OR TAKEOVER *AMALGAMATION

Joint venture

Definition 1 Increasing market share of an existing product, or promoting a new product, through strategies such as bundling, extensive advertising, lower prices, or volume discounts.

Definition 2 Measure of the extent of a product's sales volume relative to the total sales volume of all competing products, expressed as a percentage.

Example
Market Penetration: Starbucks was founded in 1971 in Seattle, and was able to achieve widespread market penetration across the United States. Soon after, they expanded globally.

 Growth can occur through market development strategies. Market development strategies refer to the various steps

initiated for building up the market for a product. Market Development Strategies involve selling the firms existing products to new groups of customers. New groups of customers can be categorized in terms of geographic, demographic, and /or based on a new product use.
1. New Geographic Market.
2. New Demographic Market. 3. New Product Use.

1.New Geographical Market

This simply suggests selling the existing product in new locations. This has the potential of increasing sales by offering the product to customers who have not previously had the chance to purchase its products. The entrepreneur must be aware of possible regional differences in customer preferences, language, and legal requirements that may necessitate a slight change in the product ( or packaging ).

2. NEW DEMOGRAPHIC MARKET

Demographics are used to characterize ( potential ) customers based upon their income , where they live, their education, age, gender and so on. For an entrepreneur that is currently selling the firms existing product to a specific demographic group the business could grow by offering the same product to a different demographic group.

3. NEW PRODUCT USE

new knowledge of product use provides insight into how

the product may be valuable to new groups of buyers. it capitalizes on existing knowledge and expertise in a particular technology and production process. A well balanced new product development strategy often allocates resources as follows: - 65% core market growth - 15% adjacent or related market growth - 15% new market creation - 5% disruption

A product is a set of tangible and intangible attributes including packaging color, price, quality and brand plus the service and reputation of the seller. - Peter D Bennelt Anything that can be offered to satisfy a need or want. - Philip Kotler Product planning involves devising procedures to evaluate the performance of products and planning the modification, where necessary, of existing products aimed at extending their lives; and the development and marketing of new products. - Dale Littler

 To cater to Consumers Requirements To Ensure Optimum Resource Utilization

To locate Strengths and Weaknesses

To Ensure Firms Survival To Increase Sales

IDEA GENERATION

SCREENING PRODUCT IDEAS

CONCEPT TESTING

COMMERCIALI SATION

TEST MARKETING

PRODUCT DEVELOPMENT

BUSINESS ANALYSIS

A situation where a company, who has had poor performance for an extended period of time, experiences a positive reversal. A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company.

1. Analyze the current position. -- Where are we now? 2. Define a target position. -- Where can we get from here?

3. Evaluate the strategic options.

4. Generate Plans, and endorse them.

 Revenue downturn caused by a weak economy

Overly optimistic sales projections

Poor strategic choices Poor execution of a good strategy

High operating costs

High fixed costs that decrease flexibility Insufficient resources

Unsuccessful R&D projects

Highly successful competitor Excessive debt burden Inadequate financial controls

 Plan Ahead Seek Help Early Minimize Expenses Evaluate The Corporate Structure

Pick Battles Carefully

Dispose Of Excess Baggage Control The Budget Increase Employee Productivity Be Realistic And Flexible Rely On Turnaround Professionals