Strategic Planning in the Small Business

Unit 3

Content

Process

From the consumers

perspective,

innova­

tion creates

a new or different

pr duct,

while product

development presentt;

the

original product

with some changes.

Here the

hope is that innovation

creates a

product

so significantly novel

that con­

sumers

shift preferences away

from exist­

ing products

and toward the newer

ones.

A reason

for the attractiveness

of a pro­

duct

innovation strategic

posture is the

hope for high returns.

Introducing

new products can result

in

large

returns until competitors

recognize

and

respond to the new changes.

However, significant

risks are also present.

For

example, being on the

cutting edge

demands

a careful and

accurate reading of

environmental trends

and necessitates

a

timely and

cost-effective response.

e The diversification

posture

A

diversification posture

OLcurs when the

business

decides to grow

by expanding

operations

into related,

but essentially

different

products or services.

Thus, the

business is no

longer limited to a single

product/market

posture. Although

a core

area of concentration

may still command

the bulk of tht.

business energies, the

total

business is broadened

to include suppor­

ting or

complementary products

or

services.

The determination
of where to expand is

a
function of two factors--competitive

opportunity and strategic
fit.

Competitive opportunity
refers to
the

firms
determination that
realistic gains

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