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The increasingly global nature of today’s business environment has further intensified challenges that companies face. It is thus more important than ever to deploy appropriate strategies in order to remain competitive.
One significant consequence is the tendency for many operators to now view growth in more strategic terms. Given the risks inherent in pursuing such strategies, developing effective growth pathways must therefore be made a top priority.
Much research corroborates the link between growth strategies and performance. However, some studies paint an inconclusive picture due to their reliance on financial indicators such as return on investment (ROI) and return on equity (ROE). Combining these with non-financial indicators that might include learning, relationships and internal processes would arguably be more indicative.
Internal and external growth strategies
Growth strategies can be internal or external in nature. Higher investment to increase production and subsequent sales forms the essence of the internal route. But this option demands considerable patience as positive outcomes are invariably slow to materialize.
Given the greater scope offered, managers might find external growth more appealing. The prevalent use of strategic alliance and merger and acquisition (M&A) in relation to growth objectives is testimony to such assumptions.
The proven effectiveness of these growth strategies has captured the attention of emerging economies aiming to attract more domestic and foreign investment. One such example is Malaysia, where the aspiration is to become a high-income country by the current decade end.
For this Southeast Asian country, it’s a mixed bag where the economic picture is concerned. While GDP rose between 2014 and 2016, the same period witnessed a fall in...