MARKET FACTORS THAT AFFECT BUSINESS GROWTH

The degree of growth and the rate at which a new venture grows are dependent on both the market and the management strategy. Market factors affect a firm’s ability to grow. 

a. The Size, Characteristics, and the Buying Power of the Target Market

If the niche market that the company is entering is by nature small and relatively stable in terms of growth, it will of course be more difficult to achieve the spectacular growth and size of the most rapidly growing companies. On the other hand, if the product or service can expand to a global market, growth and size are more likely to be attained.

b. The Nature of the Competition

Entering a market dominated by large companies is not in and of itself an automatic deterrent to growth. A small, well organized companies often able to produce its product or service at a very competitive price while maintaining high quality standards, because it does not have the enormous overhead and management salaries of the larger companies. Moreover, if an industry is an old, established one, a firm entering with an innovative product in a niche market in that industry can experience rapid rates of growth.

c. The Degree of Product Innovation in the Market

In some industries, such s the computer industry, innovation is a given, so merely offering an innovative product is not in itself enough. In highly innovative industries, the key to rapid growth is the ability to design and produce a product more quickly than competitors. By contrast, in an industry that is stable and offer products and services that could be considered commodities, entering with an innovative product or process will provide a significant competitive advantage.

d. The Status of Intellectual Property (IP) Rights

Intellectual Property rights, like patents, copyrights, trademarks, and trade secrets, offer a competitive advantage to a new venture because they provide a grace period in which to introduce the product or service before anyone can copy it.  However, relying on propriety rights alone is not wise. It is important to have a comprehensive marketing plan that enables the new business to secure a market before someone attempts to reproduce the product and compete with it.

True, an owner of intellectual property has the right to take someone who infringes on those proprietary rights to court, but the typical small company can ill-afford this time-consuming and costly process when it needs all the excess capital for growth. 

e. The Volatility of the Industry

Some industries are by their very nature volatile; that is, it is difficult to predict what will happen for any length of time and with any degree of accuracy. The computer industry in the early 1980s was such an industry; but has become more predictable as leading players have emerged. The nanotechnology industry, however, is very volatile. 

Consequently, there are opportunities for extraordinary growth in new ventures, and at the same time, a higher risk of failure. A new entry into such an industry needs to maintain a constant awareness of potential government regulations, directions that the industry is taking, and emerging competition.

f. Barriers to Entry

Some industries, simply by virtue of their size and maturity, are difficult for a new venture to enter and difficult to penetrate with sufficient market share to make a profit. Other industries prohibit new entries because the cost of participating (plant and equipment, fees, and/or compliance with regulations) is so high. Yet, in the right industry, a new venture can erect barriers of its own to slow down the entry of competing companies.  Patent rights on products, designs, or processes, for example, can effectively erect a temporary barrier to allow the new venture a window of opportunity to gain market share.

………………………………………………………………

TCB & ASSOCIATES

We are professionals in book publishing, editing of manuscripts, books and magazines, transcription of messages from tapes, audio and video CDs into texts for preachers, teachers and ministers, public speakers, politicians, etc. Organizing educational seminars and training programmes. ...Your trust, Our strength.

Leave a Reply

Your email address will not be published. Required fields are marked *

Next Post

IMPLEMENTING NON-PRICE PROMOTIONS

Sun Apr 20 , 2025
Contests, sweepstakes, demonstration models, video promotions, dealer displays, signs, point-of-purchase racks, and small samples are just a few of the types of non-price promotions. You can use non-price promotions in three ways: with your sales force, with your distribution channel, and with your customers. Sales Force Promotions  Contests are one […]
IMPLEMENTING NON-PRICE PROMOTIONS

You May Like

Chief Editor

Johny Watshon

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur