You had a brilliant idea, which inspired you to take action. Usually, growth strategy cases are introduced by open-ended questions such as “A firm XYZ wants to increase their revenue. There are a few acquisition targets Coca-Cola is considering. Additionally, joint ventures are much cheaper than acquisitions. One, Coca-Cola can leverage its existing production and distribution capabilities to gain meaningful market share in these emerging drink beverage markets quickly. Learn the right framework and see how it is applied from ex-McKinsey consultants. They have hired you to determine the best way to grow. This type of case interview may look something like the following: Your client, Coca-Cola, is looking for new opportunities to grow after years of flat growth. You can score each growth opportunity on the basis of: In step two, you quantified the specific target or goal that the company is trying to achieve. Look at potential inorganic growth opportunities. 3. First, I’d like to consider potential organic growth opportunities. The Strategy and Growth Framework outlines our priorities for 2020-2023. Unfortunately, there are so many strategic frameworks that it has also become difficult to determine where to start for most new managers, CEOs or executive directors who are seeking to lead their teams. In short, Moz is able to create short term liquidity and cash flows for its business by investing minimum resources on the SMEs segment, even though that is not the primary driver of the company’s revenues. Since Coca-Cola is a mature company that has seen flat growth, I am guessing that there won’t be significant opportunities to increase revenues from existing revenue sources. You’ll most likely want to start by looking at organic growth opportunities first because this type of growth is more sustainable than inorganic growth. The stage of the company, how much free cash it has on hand, and the level of urgency the company is facing will help you narrow down your options. Growth Strategy Examples 1. The three horizons framework offers a way to concurrently manage both current and future opportunities for growth. After a bunch of pitches, you also managed to get some venture capital funding. Often that death zone comes from a misunderstanding of the proper customer segment. NEW ZEALAND 24 February 2021 11:00 - 12:30 NZDT. And in what time period are they looking to achieve this level of growth? You can find out more about which cookies we are using or switch them off in settings. The most common type of growth that companies pursue is organic growth, which is growth driven by expanding output or engaging in internal activities. It is aligned with the Strategy and Capital Allocation Framework that we introduced in … However, initially, when companies have limited resources and funding, tuning in the right customer is critical before the company runs out of cash. It’s a classic consultant’s 2×2 matrix that we’ve used to help our clients think about where and how they can pivot their businesses to recapture lost revenue and lost demand. It is intended for small and mid-sized cities, particularly those that have limited population growth, areas of disinvestment, and/or a struggling economy. Through that process, managers, researchers and academics have created a wide range of frameworks to guide you to structure your strategic thinking and business growth. Understanding what the company is trying to grow will help you determine what growth strategies will be most effective. In other words, the company is growing through its own capabilities and efforts. How should they go about it?” Gather the necessary information about volume and price to … Sales: How to Use Sales Processes to Grow Your Business, Affirm Fintech Payment Platform Business Model, Bimodal Portfolio Management And Why It Matters For Your Business, Behavior-Driven Development In A Nutshell, AgileSHIFT And Why It Matters In Business, Agile Modeling And Why It Matters In Business, Acceptance Test-Driven Development In A Nutshell, Disciplined Agile And Why It Matters In Business, Evidence-Based Portfolio Management In A Nutshell, Experiment-Driven Development In A Nutshell, Scaled Agile Lean Development In A Nutshell. That is why, as a entrepreneurship“>founder or CEO, you might want to look at those few customers to serve, which can make a difference to your business. We suggest moving this party over to a full size window. © Copyright Hacking the Case Interview 2021. The growth rate can be calculated on a historical basis and average. Let me share with you some further information…, 5. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful. Organic growth can be segmented into growth through existing revenue sources and growth through new revenue sources. Or those customers that might want to buy your product even if it is not perfect yet. The most important part of solving growth strategy cases is to be structured and methodical in considering all of the different growth opportunities. If you lay out a comprehensive and organized framework, the rest of the case should be a simple process of elimination. A Strategic Growth Framework. However, we’ve seen how in building up a successful company, once you’ve picked up the proper customer segment, you’ve understood what the highest price you can charge for that segment (based on the value provided) is. However, after growing your company to pass the seven-figure mark, you find yourself close to the death zone. I’d also like to look into whether the acquisition price for Company X is fair and reasonable. In a joint venture, two or more companies enter a business arrangement in which they pool together resources and share risk in accomplishing a particular task. However, many do fall into that. You should pay special attention to the context of the case and the company’s circumstances. Basic tactics underlying this growth strategy include: Invest more in marketing, sales, advertising, promotion; Price and terms adjustments; Acquisitions; Modifying or customizing P/S lines to attract specific, larger customers; Basic tactics for the Product/Service Development Strategy include: Invest in R&D to develop new products or services These desired regional growth attributes are deeply interconnected. Growing revenues versus growing profits can lead to very different strategies. 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One advantage of a partnership is that it is most often cheaper than a joint venture since resources don’t necessarily need to be contributed. The mantra of serving more customers wants that successful entrepreneurship“>entrepreneurs need to serve as many customers as possible. At the same time, if your wallet is in the hand of a group of people with mixed motivations, that relationship becomes too complex to be left to marketing and branding alone. They just need to be associated with each other. the Ultimate Guide to Market Segmentation, Marketing Strategy: Definition, Types, And Examples, Growth Hacking Canvas: A Glance At The Tools To Generate Growth Ideas, Click to email this to a friend (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Telegram (Opens in new window), Click to share on Pinterest (Opens in new window), Click to share on Pocket (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on Facebook (Opens in new window), Click to share on WhatsApp (Opens in new window), A Framework To Get Organic Traffic For Your Online Business, Nine Simple Strategy Frameworks To Grow Your Business, Model After The Strategies Used By Amazon To Get…, 10 Technological Trends In Business To Watch Out In…, What drove Apple growth in 2019? You: To determine the best opportunities to achieve a $1B increase in revenues over the next three years, I’d like to use the following framework. Once again, Moz is the most established brand in the SEO industry, and it can leverage its brand and business model to execute this sort of strategy. We take that convenience for granted today, but it wasn't always the case. As a trailblazer in the cloud storage software arena, Dropbox launched in 2008 and introduced the world to the ease of keeping files in the cloud, rather than on a physical device. In that case, your organization will be primarily comprised of outside salespeople (those that meet the client face to face regularly) and engineers able to swiftly change the product features and specifics based on the feedback of the sales team. And what’s the proper balance between marketing and sales? The company still focuses on SMEs as Moz has an extremely low acquisition cost for those customers. Additionally, there are many revenue synergies that Coca-Cola can take advantage of to grow revenues even more over the next few years. If you found this article helpful, you’ll love our comprehensive case interview course. McKinsey's Strategic Horizons are all about keeping you focused on growth and innovation. And what motivates that person or group of people to keep your product in the long-run? You can think about growth through two major categories, organic growth and inorganic growth. Select Your Location. There are two reasons that support this. Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here However, it promises to solve a specific problem. That doesn’t mean you should ignore the other potential customers in the long-run. Monetization - Turn users into revenue through testing and experiment and optimize pricing plans. Acquiring a company gives the acquiring company access to the acquisition target’s distribution channels, customers, and products. The customer/problem quadrant from the LEANSTACK. The four growth strategies are Market Penetration (offering more of the existing products to existing markets), Market Development (offering the existing products to new markets), Product Development (offering new products to existing markets) and Diversification (launching new products in new markets). The four growth strategies are: market penetration, market development, product development and diversification. I’d like to look into inorganic growth opportunities next. Where the company’s growth is in jeopardy, and you still didn’t manage to master the proper organizational structure to scale further. That might sound counterintuitive, as the first examples that are readily available to our minds are those of large tech companies like Facebook and Google; which became successful by serving masses of free users, with an asymmetric business model, financed by businesses and marketers bidding for attention on those platforms. You: After looking at organic growth opportunities, we determined that Coca-Cola could increase revenues by $600M by entering three niche drink beverage markets. A growth strategy or revenue growth case interview is a common type of case you’ll see in your first round and second round consulting interviews. If your customer acquisition for segments that are less valuable for your business (for instance, because they have a higher churn rate and lower lifetime value) is low, then you might still want to exploit those opportunities. Also, companies do not have full control over their partners’ operations. Business Model Canvas Explained, Blitzscaling Business Model Innovation Canvas In A Nutshell, What Is a Value Proposition? How should we proceed? For instance, we create many categories for companies, like differences between B2B, B2C, B2B2C, and more. The material in the course has helped 6,000+ students across 13+ countries land offers at top-tier consulting firms such as McKinsey, BCG, and Bain. This will imply an organization that leverages on a very specialized salesforce. Therefore, rather than starting from the solution you have in mind. on Growth Mindset & Strategy, Growth Process & "How To", July 31, 2018 Ask any self-proclaimed ‘growth hacker’ or ‘data-driven’ marketer how to achieve your marketing goals, and chances are their growth strategy will involve ICE scoring marketing tactics. After a bunch of pitches, you also managed to get some venture capital funding. Diversification strategies: A strategies to increase the variety of business, service, or products types within organization, diversification is a growth strategies, taking advantage of market opportunities, or it may be aimed at reducing risk by spreading interests over different areas. Consider whether an acquisition, joint venture, or partnership would be most appropriate given your company’s situation. USA 23 February 2021 14:00 - 15:30 PST. You need to be very specific. Who is going to make the purchasing decision (a person or a group of people)? More blindly that happens when a company never reaches that sweet spot between growth, profitability, and cash flows to enable it to build a sustainable business model. A strategic assessment of the market. A third and critical point is about the organizational structure. Interviewer: Your client, Coca-Cola, is looking for new opportunities to grow after years of flat growth. Therefore, if the key customers are willing to stay with you longer because they know you will keep adding key features to the product, you’ll need to hire more engineers. When market is fully penetrated, it is advised for businesses to either proceed with the market development for existing product or product development for existing market. Then you know you need to organize your company around content marketing. Understand what the company is trying to grow. Thus your organizational structure will highly focus on hiring marketers and engineers. The five most common growth strategies - the Growth Stars. Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Are they trying to grow revenues, profits, number of customers, or something else? Make sure that your recommendation meets these goals. Therefore, bringing in an additional customer is a painful process. The post-it business plan is a methodology that helps you focus on keeping a long-term focus on your mission and... Post was not sent - check your email addresses! Thank you for your recommendation. You: Is Coca-Cola looking to grow revenues, profits, or something else? In short, are you going to leverage marketing, sales, or both? If you disable this cookie, we will not be able to save your preferences. You: How much is Coca-Cola looking to grow revenue by? Interviewer: That sounds like a great plan. This is slightly different from a joint venture because in a partnership, companies do not necessarily have to combine resources or efforts. Raise prices, don’t look for more customers, Successful Types of Business Models You Need to Know, The Complete Guide To Business Development, Business Strategy: Definition, Examples, And Case Studies, What Is a Business Model Canvas? Rather than looking at complicated things, I want you to focus on a single idea: the wallet. Those cases, of companies built on a massive and distributed customer base, are more an isolated phenomenon, rather than the rule of thumb. Growth strategies are never pursued in a vacuum, and being willing to change course in response to feedback from the market is as important as implementing a strategy … For example, if the company wants to grow revenue, how much of a revenue increase are they hoping for? Is there a particular acquisition, joint venture, or partnership that would make sense for Coca-Cola to pursue? This website uses cookies so that we can provide you with the best user experience possible. However, often, those same opportunities come when you already have an established brand and a scalable business model. The advantages of making an acquisition are that the company increases its revenues immediately. Answers the … Developed by an ex-McKinsey consultant the guide includes best practices, examples, and a complete 54-page Sales Strategy Plan PowerPoint Presentation. This means that it: Involves all departments of the company (versus marketing only). And a deliberate execution. Two, the acquisition of Company X would increase revenues by $500M, helping Coca-Cola achieve its revenue growth target. Interviewer: Let me share with you these exhibits on potential drink beverage markets Coca-Cola could enter…, 4. Common business growth strategies In his book The Breakthrough Company, Keith McFarland recommends that small businesses and startups considering growth should proceed in a way that brings “the most results from the least amount of risk and effort.” This is another important aspect of prioritizing goals. For instance, if your key customer base is willing to purchase your product because it trusts your brand. For instance, if we look at companies like Algolia (a search engine for websites), it is interesting to notice how of the over six thousand customers, about three hundred might make up around 80% of the company’s overall revenues.