Three Strategies for Managing
Erin, Giang, Jason, Mike, Scott
BA 569 -- Fall 2007
The Three Strategies:
Scaling -- Giang
Duplication -- Mike
Granulation -- Scott
Combining -- Erin
Scaling: Doing more of what you
are good at
What does it start with?
- A coherent vision about
concrete product, technology
and customer segment
- A brief, clear and
understandable vision that
reflects company’s
commitment growth
Is it the right the strategy?
Potentially large market
Unique product
Wide distribution system at low cost
How to do it?
Invest aggressively
Specialize and Standardize
Hire the right mix
Adapt the structures
Find ways to learn from customers early
Creating a Great Strategy:
Business Week
“Repeating The Business Model In New Regions”
When you discover what works in one region do the same thing in the next!
Duplication starts with a coherent vision of products, technologies and
customer segments plus goals for geographic expansion
“Swedish Design skills and stores that could communicate an appealing
lifestyle to young people everywhere”
Balance standardization and
“Package the companies entrepreneurial know-how for new geographic
Balance Standardization
-Keeping processes and organizational details close to the way they
are done in the original location
-Changing the organization and processes to address the needs of
the local region
Standardized Staffing, Training, and remuneration plans
-Company can rotate employees instead of having to hire and train
new people when sales work in one locale increases
Is Duplication The Right
-The business requires physical presence and the company can repeat its
business model in new geographic markets
EX: For businesses that sell items that the customer wants to see and touch!
-There is a need for local distribution
-A company would shift from a scaling strategy to a duplication strategy when
distribution channels are underdeveloped
-The company can Adapt Its Experiences in product development, manufacturing
and marketing approaches fairly easily
-New trends from foreign markets can lead to better target marketing
Duplicate key parts of the
• A company needs to externalize or transfer key elements of the
EX: Ikea's European Expansion
-European expansion group, “Knowledge Marines”
Buy Land
Construct Outlets
Design Sore Decor
Hire Employees
-Two months before opening First Year Group would take charge
Training People,
Setting Up Operations
Arranging The Store Openings
Establishing local organization to run the operations
Duplicate Entrepreneurial knowledge
-Site locations
-Store design’s and layouts
-Catalog Format
-Standardized and documented products
-Personnel selection and training
Be aware Of The Limitations
Of Duplication strategies!
Customer tastes and employee backgrounds are too diverse for one set of
processes and programs to fit all situations
 When Ikea expanded to the US there many subtle differences in
tastes and shopping,
 European sheets did not fit American beds
A company must be able to learn quickly, fixing procedures and products
that don’t work and make the people who created them aware of the new
 Senior management must have the openness and flexibility
necessary for modifying a formula that was a winner back home
 Especially true for young high-growth companies expanding
abroad in highly competitive market
Duplication Challenges!
For a company to utilize
duplication they need to
learn information on
each market they are
entering into
Local market conditions
Mass manufacturing
Mass Marketing
Competitors in each market with
their own strengths and
Currency risks
Regulatory differences
The best way to handle logistics
Granulation Strategy:
gran·ule [gran-yool]
• n. a tiny grain or cell
gran·u·la·tion [gran-yuh-leyshuhn]
• n. A business strategy focusing on
growing select cells within a company
Granulation: SAP
1972 - Founded in Germany in 1972,
• releases R/1
1992 - SAP Scales up
• Launches R/3, becomes global software
1996 - SAP Duplicates
• Reorganizes into industry business units
1999 – SAP Granulates
- Began focusing on Web interfaces
2003 - Launched NetWeaver
Is Granulation the Right
for You?
Has your company:
• Exhausted growth through Scaling
& Duplicating?
• Identified a new technology that
could be substituted for your own
• Matured sufficiently to handle
Granulation: Evaluate & Monitor
Obtain external knowledge
Focus on your new industry
Granulation: Learn from
Customers, Partners, &
Strategic Alliances
• Share the knowledge
Acquire smaller companies
• Buy the knowledge
Key Takeaway:
• Know the industry you’re entering.
The Original Strategies
Scaling: A company expands their business product
development, new product lines, increasing distribution
channels, to name a few.
Duplication: Using the company’s vision to expand
Granulation: Aggressively growing select areas of the company.
Combining the Strategies
A company must select the growth strategy of best fit.
The scaling strategy is the easiest strategy to implement.
• The company expands upon its core competencies, with the
company’s original vision in mind.
The duplication strategy is more complex because companies
must expand and adapt to a new geographical market.
Granulation is the most difficult strategy
• Involves studying competitors, new markets and opportunities
Combining the Strategies
Some companies apply all three growth strategies at once.
• These are large companies that have different parts of their business in
different stages of growth
A company may first try scaling until it reaches its upper limits to
begin duplication and then eventually pursue granulation.
• Example: Disney
Scaled by expanding product lines from original Mickey Mouse
cartoon to other movie ventures, themed amusement parks, etc.
Duplicated by introducing amusement parks overseas i.e.:
Disneyland Paris
Pursued granulation by growth of their television business sector
Combining the Strategies
Some successful companies implement all three growth strategies
at once
• Example: SAP
First attempted scaling when they developed the R/1, then R/2,
and eventually the R/3, a program that helped companies
integrate resource planning across functions and customersuppliers.
Realized they had over engineered the R/3 and decided to
introduce AcceleratedSAP. Used the duplication process based
on their knowledge of software systems.
SAP uses granulation by sharing entrepreneurial knowledge in
new business areas for new markets.