1. Strategic Thinking for the Next Economy Chapter 12: Three Strategies for Managing Fast Growth

2. It has been said that companies can grow themselves right out of business. Growth as a product of circumstance Focus on short-term survival The key to successful corporate life is steady growth. Can’t leave growth to chance Focus should be on the future and company’s direction

3. Strategic Growth Options Scaling Duplication Granulation Tip: There is no one best strategy, companies may use more than one of the options. Just make sure to focus on  Organization Learning  Knowledge Acquisition  Knowledge Transfer

4. Growth Strategy: Scaling Definition: Doing more of what you are good at Start with a coherent vision of products, technologies and customers Focus on a concrete product, technology and customer segment Implement vision quickly

5. Should a company use scaling? Is the market is potentially large enough for rapid growth in a focused product line? Does the product creates unique value? Will there be low cost for wide product distribution?

6. Methodology of Scaling Invest aggressively before apparent sales growth expand core technologies, product lines; get new customers with existing distribution channels; increase manufacturing capacity; enlarge corporate infrastructure. Specialize and standardize Centralize and standardize administrative areas

7. Methodology of Scaling Hire the right mix  learn quickly and share insights; right people at right positions Adapt the structures  right organizational structures, processes and culture; multi-divisions Learn from customers early  good sense to the market

8. Growth Strategy: Duplication Definition: Repeat the business model in new regions Starts with a coherent vision of products, technologies, and customer segments. The vision must include goals for geographical expansion

9. Methodology of Duplicaton Balance standardization and adaptation Hire flexible, independent managers Duplicate key parts of the infrastructure Duplicate entrepreneurial knowledge Be aware of the limitations

10. Should a company use duplication? Growth by duplication works best when The business requires physical presence and the company can repeat its business model in new geographic markets There is a need for better distribution The company can adapt its experience in product development, manufacturing and marketing approaches fairly easily

11. Growth Strategy: Granulation Definition: Aggressively growing smaller business units Internal entrepreneur’s paradise  Developing unique capabilities  Creating new businesses  Use existing assets in new ways Gain external knowledge  Research  Acquisition  Alliances

12. Should a company use granulation? When to use  Scaling and Duplication have hit their limits Relevant markets conquered Product demand is flattening  New technology available Possible substitute to current product Protect position by adopting new technology  Company is sufficiently mature Monitor new business activities Learn about new markets and competition

13. Looking at all Three Methods Which method is best for our firm? Simultaneous approach  Can work for larger companies Generally a natural progression  Scale  Duplicate  Granulate

14. Group Activity Please get into 5 separate groups We are going to evaluate 9 different scenarios from FedEx to further understand the three methods of strategic growth Your group should pick the growth strategy that best suits each scenario

15. FedEx: Background On the first night of continuous operation, 389 Federal Express Employees and 14 Dassault Falcon jets delivered 186 packages overnight to 25 US cities-and the modern air/ground express industry is born.

16. Federal Express introduces the Overnight Letter Federal Express aquires Gelco Express Interenation and launches operations in Asia Pacific The first PC-based automated shipping system, later named FedEx PowerShip, is introduced Federal Express introduces SuperTracker, a hand-held bar code scanner system that captures detailed package information The Federal Express Clear Electronic Customs Clearance System is created to expedite regulartory clearance while cargo is en route Parent company FDX is renamed “FedEx Corporation.” Services are divided into companies that operate independently yet collectively: FedEx Ground, FedEx Global Logisitics, FedEx Custom Critical and FedEx Servies. FedEx introduces customer technology solutions including a redesigned fedex.com, FedEx e-Commerce Builder, FedEx Global Trade Manager and FedEx Ship Manager FedEx Corp. acquires American Freightways, a less-than-truckload carrier serving the 40 eastern states in the US FedEx Corp. acquires Kinko’s, which expands the company’s retail access to all of the 1,200+ Kinko’s stores for greater customer convenience and increases in its portfolio of services

17. Group Case Study Handout 5-minute Group Huddle Class Discussion

18. Conclusion A firm must manage growth!  Scaling = Focus on core competency  Duplication = Franchise  Granulation = Diversification There is no one best strategy! What was Google’s strategy?

19. Questions?