Training Implications of Four Business Strategies: Concentration, Internal Growth, External Growth, and Disinvestment
Training and development initiatives are key to facilitate the teaching and understanding of strategy. The ability to shape an organization to meet its is objectives requires purposeful, strategic action. Owners and leaders in small and medium sized organizations are conductors to their organizational orchestra. Every excellent conductor has a strategy, and behind that strategy is teaching and leading members how to perform in perfect sync and rhythm to deliver a dynamic experience. Here, the purpose of this article is to discuss four business strategies and factors to consider in regards to training and development initiatives that either support or hinder such strategic initiatives.
“The best CEOs that I know are teachers,
and at the core of what they teach is strategy”
– Michael Porter, Ph.D
- Concentration. The concentration business strategy focuses on increasing market share, reducing
operational costs, and establishing market specialization. The method in which strategy focuses on innovation in product, process and service improvement will vary per firm. From a training perspective, the needs assessment concentrates on competencies needed to develop talent. Potential areas of concern may include costs associated with the training, relevance, and credibility of training initiatives, and actual application of such expertise.
- Internal Growth. The internal growth strategy may focus on a variety of key areas within a firm to expand products, research and development, talent, and other key business initiatives that may help to grow the existing business. Depending on the scope internal growth areas the initiatives established may vary. The initiatives may include expanding product and marketing channels, research and development, quality improvement or revamping product and service lines. Major factors that typically arise in the business strategy include innovation, knowledge management, recruitment and retention of key talent, identification of financial and non-financial resources needed. From a training perspective, a needs assessment would be a valuable tool to identify specific needs relevant to the specific internal growth strategies, establish the competency based training needed, and determine the most appropriate forms of training that align with the internal growth initiatives.
- External Growth. The external growth strategy focuses on expanding by incorporating outside approaches, such as horizontal and vertical integration's via strategic alliances. Depending on the strategic alliance, i.e. merger, joint venture, or acquisition the issues associated with such a strategy may vary. For example, one could argue that an acquisition is not “equal” strategic alliance. The idea with such initiatives is that there is a 1+1 = +2 based on some complimentary or other synergies that such a deal would provide. From my dissertation research, this is one of the hardest strategies to achieve because two out of three mergers and acquisitions fail to achieve their proposed synergies. The high impact of failure is the people side of the deal. Therefore, from a training perspective integration preparation focused on HR related areas (talent, procedures, compensation, roles and responsibilities) and culture (blended culture) are encouraged areas of training specialization.
- Disinvestment. The disinvestment strategy focuses on selling or changing investments based on focusing on new organizational objectives. Similar to focusing on ways to grow or expand business operations, the disinvestment strategy focuses on what assets should stop, be liquidated, or downsize specific initiatives.The strategy is designed to minimize costs and increase revenues. The nature of disinvestment may vary. However, common reasons may include doesn't fit with the core business needs, changes in business initiatives, legal constraints, alternative initiatives that align with the core business, needs cash or underperformance. Depending on the specific situation, the training implication may include leadership training, outplacement services, analysis of data to make more informed decisions. The training implications depend on the specific situation, and a needs assessment is encouraged to determine the best fit of training initiatives to assist with such a strategic initiative.
In essence, training implications arise in each of the four business strategies. The key is to understand the difference between concentration, internal growth, external growth, and disinvestment strategies. Likewise, to understand the impact training initiatives may have in each of the strategies. The training initiatives will vary based on the specific needs assessment of the firm and the strategy. The more awareness and understanding of such initiatives will help owners and leadership of small and medium sized businesses to make more informed decisions about training initiatives that align with business strategy.
by Katie Doseck, PhD MBA
Chief Visionary and Strategic Ace Up Your Sleeve | Viral Solutions LLC
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