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GEO 301
Joseph Aversa

GEO 301-LECTURE 2-September 17 , 2013  Growth Strategies:  Organic Growth o Slow process o Owned by actual company choosing to expand and grow o Open up one store, open up another store, another store.... o With capital, you can speed up process o 2008: Companies closed their doors  The Source  Linen’s and Things o Two different types of organic growth strategies o Hierarchical Diffusion (Refer to slides)  Population (High Density): Building upwards  Business Activity  Pop Culture in Toronto makes it attractive  This is why we have the most initial openings  Start in higher order locations and move lower order locations  Hierarchial Diffusion-Strategic Regional Development  Start in big cities like Toronto, Calgary, Vancouver and move out o Contagious Diffusion  Start in a particular region and expand into neighbouring locations o Hierarchial/Contagious Combination  Requires organization to have reached a large size o Wal Mart had a reverse hierarchial contagious combination  Started in small towns and moved out into big cities o International Organic Growth  Very difficult to break into markets  Slow process  Works for certain retail sectors and doesn’t work for others  Will often use contagious diffusion close to borders (cities), less risky, you can use your trucks and drive over the border, less costly  Lowe’s acquisitions of 5 Sam’s Clubs stores  Lowe’s has been trying to buy Rona for the last year  Lowe’s target women, marketing towards women o Mergers and Acquisitions o Mergers  Two or more companies come together  Ex. Sears and Simpsons->SimpsonsSears  It lasted for a decade before becoming an acquisition or takeover o Acquisitions  Buy out more than 50% of shares in the company  Company which is purchased no longer exists  Ex. La Senza and Victoria’s Secret, Canadian Tire and Forzanni, Lauren Taylor and the Bay, o Takeovers  Buying controlling shares of another company but the purchased company can still exist  Ex. BestBuy and Future Shop, o Post Merger Rationalization  Wilco and Wal Mart, weeding out locations o Sears and Simpsons had geographical overlap and looking at how to weed out certain locations that were cannibalizing their market share o Franchising  Process of selling or leasing a company’s brand/product who will own or operate a location  Allows for fast expansion with low access to capital  However, reduces share of profit  Tim Horton’s, Boston Pizza, Canadian Tire,  Pro: You can expand quickly, and make a lot of money  Con: You only take in a percentage of sales and front in the cash o Joint Ventures and Strategic Alliances  Partnerships that do not involve combining companies or exchanging shares  Exchange of expertise  Economies of scale/network effects  Airline alliances, Sony and Ericsson, Star Alliance o Warehousing  Retailing requires a system of depots for physically distributing goods to market  You have to commit (Logistics system need to be timely)  Smaller number of larger depots  Geographical problem  Companies ability to expand into a new market depends on the geographical coverage of the distribution system  JUST IN TIME SYSTEM  This is why contagious diffusion is of
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