Concentrated_Growth

Concentrated Growth Concentrated growth is a grand strategy where a firm directs its resources to the profitable growth of a product within its market with a dominant technology (Pearce & Robinson, 2009). Concentrated growth is defined as “Business expansion resulting from the strategy of focusing on products and markets that are similar to, or complement, the current range of goods or services” (BusinessDictionary.com, 2010). Enhanced performance comes from concentrated growth strategies. The high success rates of new products are tied to avoiding situations that require undeveloped skills. A major misconception about concentrated growth strategy is the firm that practices it settles for a minimal amount of growth. This misconception is not true for a firm that utilizes the strategy correctly. A firm that employs concentrated growth grows by building its competencies (Pearce & Robinson, 2009). Specific conditions in the environment of the firm are favorable to the concentrated growth strategy. The first condition is which the firm’s industry is resistant to major technological advancements. The second condition is one in which the firm’s targeted markets are not product saturated. The third condition favors concentrated growth when the firm’s product markets are sufficiently distinctive to dissuade competitors. The fourth condition exists when the firm’s inputs are stable in price and quantity (Pearce & Robinson, 2009). In a changing environment, a firm that is committed to concentrated growth faces high risk. The largest risk is concentrating in a single market makes the firm is concentrating in a single market makes the firm vulnerable to changes in that segment. Concentrating on a firm’s entrenchment makes it susceptible to economic environment changes in that industry. A firm pursuing concentrated growth strategy is also vulnerable to high opportunity costs resulting from remaining in specific markets (Pearce & Robinson, 2009). Concentrated growth is often the most viable option. Some examples of firms that received exceptional returns on the concentrated growth strategy, these firms include: Apple computers, McDonald’s, and Goodyear. The firm that chooses a concentrated growth strategy directs its resources to the profitable growth of narrow defined product and market focuses on a dominant technology. The grand strategy of concentrated growth allows a considerable range of action, meaning a firm attempting to capture a larger market increases the usage of rates of present customers by attracting competitor’s customers, or selling to nonusers (Pearce & Robinson, 2009).