FEDEX COMPANY
PREPARED FOR:
PhD Pham Quoc Khanh (lecturer)
PREPARED BY
Do Viet Dung – Casper
ITP F04 – 037
SUBMISSION DATE:
8th January, 2013
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO3. UNDERSTAND APPROACHES TO STRATEGY EVALUATION AND SELECTION. .4
1. Analyze possible alternative strategies relating to substantive growth, limited, growth or retrenchment.................................................................................................................................4
a. Five years objectives.........................................................................................................4
b. The stages for five years...................................................................................................4
c. Alternatives for FedEx’s strategies...................................................................................5
2. An appropriate future strategy for FedEx.............................................................................8
a. Analysis of suitability.......................................................................................................8
b. Analysis of feasibility.......................................................................................................9
c. Analysis of stakeholder’s Acceptability...........................................................................9
d. Analysis of risk...............................................................................................................10
e. Score and ranking............................................................................................................11
f. Selection and improvement.............................................................................................11
LO4. UNDERSTAND HOW TO IMPLEMENT A CHOSEN STRATEGY...............................12
3. Compare the roles and responsibilities for strategy implementation..................................12
a. Sub-objectives or targets.................................................................................................12
b. Activities to archive each target and department to carry out each activity...................12
4. Evaluate resources requirement to implement a new strategy for FedEx..........................15
5. Target and timescales for achievement in FedEx to monitor a given strategy...................18
a. Action plan for each department in line with objectives of different stages...................18
b. Measurement...................................................................................................................21
CONCLUSION..............................................................................................................................22
REFERENCES..............................................................................................................................22
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INTRODUCTION
This report is about the various approaches to strategy evaluation and selection which are
applicable to FedEx Company. Firstly, the report will provide to FedEx possible alternatives for
FedEx’s strategies which can be used to archive five year objectives of FedEx which are limited
growth, substantive growth, and retrenchment growth strategy. After that, the report will evaluate
these alternative strategies base on the analysis of suitability, feasibility, stakeholders’
acceptability, and risk. Thus, the report shows how to implement a chosen strategy through the
roles and responsibilities for strategy, resources requirements and targets and timescales for
achievement.
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LO3. UNDERSTAND APPROACHES TO STRATEGY EVALUATION AND
SELECTION
1. Analyze possible alternative strategies relating to substantive growth, limited,
growth or retrenchment
a. Five years objectives
The vision of FedEx Company is make it possible for people and business to connect and
collaborate with each other, no matter where they in the world and FedEx’s mission is
producing superior financial return for its shareowners through provide high value-added
logistic, transportation and related business services by focused operating companies. In
addition, FedEx also has to meet customer requirement based in the highest quality manner
appropriate to each market segment served and FedEx will strive to develop mutually
rewarding relationships with its employees, partners and suppliers. Based on that, FedEx
actually set up the objectives for the next 5 year which is expanding the business to the new
markets and bring to customers perfect services to make FedEx’s express and
transportation service is the first choice of customers based on that increase profit 18% at
the end of 2017.
The objectives of FedEx will be evaluated based on SMART technique
Specific Measurable Achievable Relevant TimetableEvaluation
YES YES YES YES YES
b. The stages for five years
To make the effective of objectives is highest, FedEx actually divide the completed time
objectives to three stages. The first stage is three years (2013 to 2015), in this time FedEx
will increase its revenue by 10 percent annually based on the increase of sales and
customers and the second stage (2016) will be for completing the growth of the market
share in all the market by 8 percent. The last stages (2017) will be the time FedEx creates
new alliances and services for new markets leads to the expansion of the business of
FedEx.
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c. Alternatives for FedEx’s strategies
Limited growth
Market penetration: The growth which based on the market penetration is not related to the
business activities of the company in new market or creating new products/ services. It is a
strategy in which the company can increase market share using current products or services
(Clark, n.d.). For example with the case of FedEx Company, FedEx may provide lower
price of services, good quality of service and also using the promotion in order to advertise
the existing services. Thus, FedEx can improve the competitive ability to compete with
competitors to attract new customers and also increase the use of current customers.
Product development: By creating new products/ services to serve the same market the
company can provide these new products/ services to existing customers and grow the
business of the company without tapping new markets. With the case of FedEx, continuing
the FedEx commitment to the pursuit and development of technologies, FedEx will strive
to provide innovative solutions and services for customers (FedEx Coporation, n.d.). Based
on that, FedEx will have the advantages in the competition with its competitor but it also
make the competition is harder because it leads to the innovation of competitors.
Market development: It involves introducing the company products/ services to new
markets. For example, FedEx can enter a new country, a new city, and even targeting a
market segment. Thus, FedEx could attract more new customers and make a good image in
customers’ mind. But market development strategy will take higher cost and more time
from FedEx.
Substantive growth
Substantive growth strategy includes four main types which are horizontal integration,
vertical integration, related and unrelated diversification. Furthermore, substantive growth
strategy is frequently implemented through acquisition, merger or joint venture rather than
organic growth. (Thompson, 2001)
Horizontal integration: it is a strategy in which the company can increase its market share
by taking over a similar company in the market. Furthermore, this merger can be made in
the same geography or probably in other countries to increase the number of customers
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(Anon., n.d.). For the case of FedEx, horizontal integration can help FedEx holds more
market share and make more profit in the new markets even old markets. On the other
hand, horizontal integration will be a good way for FedEx completes the objective of
increasing 10% revenue annually from 2013 to 2015 and also increase the market share of
all the markets (2016) while FedEx has more market share.
Vertical integration: It is the process based on that the company can control some steps of
the production or distribution of the product or service in order to increase the company’s
or entity’s power in the market place (Anon., n.d.). For example, by using vertical
integration FedEx can reduce the transportation cost by building a hub in the airport where
the packages are sorted based on their destinations and after that the packages will stay at
the hub until they are delivered by plane, improve supply chain coordination, or increase
entry barriers to potential competitors.
Related diversification: the company can develop the old product or service to new ones
and there is a relationship between existing product/ service and new product/ service.
Unrelated diversification: There is no discernible relationship between existing and new
products, services and markets. The main advantage of unrelated diversification is make
high financial benefits and profits from the new investment and for the case of FedEx;
unrelated diversification can is the way for FedEx can get the third stage of objective
(2017) which is creates new alliances and services for new markets leads to the expansion
of the business of FedEx.
Conclusion: Substantive growth strategy is a perfect strategy for FedEx because depend
on it FedEx can complete all stages of five years objectives and the only work for FedEx is
considering how to use unrelated diversification, horizontal integration and vertical
integration in the highest effective way.
Retrenchment strategies
While corporate strategies prefer finding ways to expand business, they often face tough
economic times and need a more conservative approach. The retrenchment strategy
provides corporation a chance to regroup, preserving resources for the greater good and it
includes divestment, bankruptcy, and liquidation. Honestly, the retrenchment strategy is not
matched for FedEx Company in order to complete the five year objectives.
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Alternative strategies for FedEx’s stages
Alternative strategies
Stage 1 Stage 2 Stage 3
Limited growth By using market penetration, FedEx can attract new customers and make the use of current customers increase so make the revenue of FedEx increase.By using market development, FedEx also could attract more new customers and make a good image in customers’ mind by introducing new services to new markets
Based on market penetration, the market share of FedEx will increase.
Based on the product development, FedEx can create new alliances and services for new markets leads to the expansion of the business of FedEx.
Substantive growth strategy
By using horizontal integration FedEx holds more market share and make more profit in the new markets even old market and vertical integration help FedEx reduces the cost
FedEx should use horizontal integration because when FedEx merges with a local similar company of the foreign market; FedEx can take advantage of the reputation of this local company to increase the market share.
By using unrelated diversification FedEx will can make new product/ service or develop existing product/ service for new markets in order to expand its business
Figure 1: Alternative strategies for FedEx’s stages
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2. An appropriate future strategy for FedEx
a. Analysis of suitability
Alternative strategies Suitability
Limited growth To complete the first stage of five year objective from 2013 to
2015 and the second ones, FedEx can introduce the services to the
new customers in new markets such as Vietnam, Lao, and other
countries in South East Asia through market development in order
to attract more potential customers. Furthermore, introducing its
services should goes with the promotion FedEx will send a small
gift for potential customers who usually purchase its services. On
the other hand, FedEx will use competitive price in existing
services to increase the use of current customers. But besides that,
FedEx also should consider about the cost of strategy because
market penetration will take lower cost and shorter time than
market development.
About the third stage (2017), product development is objectives
of the third stage FedEx provide new services to customers but it
is quite of expensive and take a long time to develop the services.
Substantive growth In the first stage and second stage of FedEx, by merging similar
local companies in the foreign markets FedEx can get the trust of
customers of foreign countries and reduce the risk of loss from
the different about traditional, culture, and even customers’ think
from that there is more market share and more profit for FedEx.
About the third stage of FedEx, there is more risk for FedEx when
it joins in new fields through new service and new markets.
Because of new service and new markets so there are not many
customers know and trust the service of FedEx.
Figure 2: Analysis of suitability
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b. Analysis of feasibility
Alternative strategies Feasibility
Limited growth Financial Management: it is easy for FedEx management to
balance existing operations as well as managing expansion into
new markets when FedEx uses limited growth because the
financial and logistic challenges of rapid growth are usually too
complicated for even skilled managers to handle in the effective
way. (Richards, n.d.)
Human resources: FedEx does its business through more than
200,000 staffs that have good skills and professional behavior so
it leads to FedEx can make a good image in customers’ mind.
Furthermore, it is easy for FedEx completes promotion works and
develop services based on its staffs.
Substantive growth External relation and partnerships: based on the good external
relationship and the correlation relationship with partners, it is
easier for FedEx merges other companies.
Technologies: By improving the technologies innovation, FedEx
also can create new services for new markets.
Figure 3: Analysis of feasibility
c. Analysis of stakeholder’s Acceptability
Alternative strategies Stakeholder’s Acceptability
Limited growth If FedEx Company uses limited growth strategy, FedEx can avoid
the massive debt that often accompany rapid growth strategy
furthermore, this debt will be very costly especially when
FedEx’s sales are not high as expected.
Thus, banks are interested with the financial situation of FedEx so
FedEx can get the support from banks.
When FedEx introduces the services to the new customers in new
markets and gives them the competitive prices so FedEx could get
the trust of customers and they will accept the brand of FedEx.
Substantive growth By improving the technologies innovation, FedEx can create new
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services in better way so FedEx will create good image in
customers’ mind.
Furthermore, the greatest advantage of substantive growth
strategy is the fact that it will lead to more growth in the future
and wealth tends to growth exponentially. Thus, FedEx will have
high return on investment and strong financial position.
Through the achievement of substantive growth, FedEx not only
bring benefit to its owner and employees but also increasing the
wealth of society at large. Thus, FedEx will get the loyalty of its
employees and the support from the government.
Figure 4: Analysis of stakeholders’ acceptability
d. Analysis of risk
Alternative strategies Potential risk
Limited growth Economic risk: When using limited growth strategy, the
competitors of FedEx may be able to take market share by
adopting their own rapid growth strategies. FedEx will have to
face the competitive challenges from its competitor to maintain
and increase its market shares.
Financial risk: in general way most of investors and shareholders
are primarily interested in a limited duration for their investment
no more than few years. They want to take the profit from their
investment so the manager of FedEx who use the limited growth
strategy could face the substantial pressure from them to grow
FedEx quickly.
Substantive growth Risk from the different of culture, traditional and economic
situation in foreign markets: when FedEx joins in the new
markets FedEx may have some problems from economic situation
such as inflation rate or interest rate even the decision of
customers based on their culture and traditional.
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Political risk: FedEx has to consider about the rules which was
made by the government for example tax rules.
Figure 5: Analysis of risk
e. Score and ranking
Alternative strategies
Scores (1 – 10)Suitability Feasibility Acceptability Risks Total
Limited growth 9 9 9 8 35Substantive growth 8 8 9 6 33
Figure 6: Score and ranking
f. Selection and improvement
According to the score and ranking, it is easy to see that the limited growth strategy is
better than substantive growth strategies for FedEx Company. But FedEx also use the
substantive growth strategy in some special situations because it can bring exponentially
profits for FedEx. Furthermore, when FedEx wants to join in the new markets in order to
approach new potential customers FedEx needs to merge or take over a local company to
take advantage of the branch of the local company in order to build its good image in
customers’ mind. On the hand, the substantive growth strategy also helps FedEx controls
some part of production or distribution in order to reduce the cost.
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LO4. UNDERSTAND HOW TO IMPLEMENT A CHOSEN STRATEGY
3. Compare the roles and responsibilities for strategy implementation
a. Sub-objectives or targets
Stage 1: Increase the revenue by 10 percent annually from 2013 to 2015
Maintain the existing customers and increase the number of new potential
customers
Increasing the frequency of transactions per customer and make each of
customers use services more
Stage 2: Increase 8 percent of market share in all the market in the year 2016
Increase the market share in potential foreign markets such as Vietnam
Improve the competitive ability of FedEx to compete with other competitor
Stage 3: Crease new alliances and services for new markets in the year 2017
Invest more money in the process of improving technology innovation
Improve the quality of FedEx’s employees.
b. Activities to archive each target and department to carry out each activity
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Objectives Sub-Objectives Activities to archive the objectives Department to carry out the activities
Increase the
revenue by 10
percent
annually from
2013 to 2015
Maintain the existing
customers and increase
the number of new
potential customers
Increasing the frequency
of transactions per
customer and make each
of customers use
services more
Producing good services after sales for
customer and provide discount price,
gift to potential customers and old
customers to increase the loyal of
customers.
Using promotion activities to introduce
about FedEx’s services through
newspapers, magazines, the internet
and television in order to make more
new customers know about the service
of FedEx
Customer Support Department: in
which everything that related to
customers’ service will be solved. They
will ensure that customers always satisfy
with FedEx’s service.
Marketing Department: in which the
staffs of FedEx will create and complete
the projects that will be used for
introduce, advertise, and promote the
services of FedEx to customers.
Furthermore, marketing department will
ensure that FedEx has good reputation in
customers’ mind.
Increase 8
percent of
market share in
all the market
in the year
2016
Increase the market
share in potential
foreign markets such as
Vietnam
Improve the competitive
Making the new projects that will help
FedEx runs its business in new markets
in which there is only few or no
competition from other companies for
market share.
FedEx needs to advertise to customers
Business Planning Department: they
will have the responsibility to analyze the
research, cost and implication of an
investment from that make detailed
projects which helps FedEx can enter the
new markets.
Marketing Department:
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ability of FedEx to
compete with other
competitor
the information about services of
FedEx through the internet, television,
newspapers, and magazines to improve
the competitive of FedEx. Thus, FedEx
will have the advantage is the
competition for market share with other
competitors.
Crease new
alliances and
services for
new markets in
the year 2017
Invest more money in
the process of improving
technology innovation.
Improve the quality of
FedEx’s employees
By improving the technology
innovation, it is easier for FedEx to
create new services for new markets.
FedEx has to train its staffs to become
people who have good skills and
professional behavior after that FedEx
will divide them into development
teams in order to research for creating
new alliances and services
Development Department: They have
missions to improve the technologies
through innovation in order to meet the
requirement of customers.
Training Department: In which staffs
of FedEx will be trained to become most
skilled staffs and have professional
behavior these staffs can contribute new
ideas for creating new alliances and
services.
Figure 7: Activities to archive each target and Department to carry out each activity
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4. Evaluate resources requirement to implement a new strategy for FedEx
Sub-Objective Key activities to archive the objectives Resources for each activity
Maintain the existing
customers and increase
the number of new
potential customers.
Increasing the frequency
of transactions per
customer and make each
of customers use
services more
Producing good services after sales for
customer and provide discount price, gift to
potential customers and old customers to
increase the loyal of customers.
Using promotion activities to introduce about
FedEx’s services through newspapers,
magazines, the internet and television
Financial resources: FedEx will make an account
in which the amount of money will be used for
show the grateful of FedEx to potential customers
and old customers through gifts or discount prices
of services. FedEx should invest in this account
about 15 percent of the annual revenue for each
year; for example, the revenue of 2012 was $42
billion so the money FedEx should use for the
account is about $ 6.3 billion. It is not a big number
but it is necessary for show the grateful of FedEx to
potential customers. Besides that, FedEx also
should spend about $ 9billion to promotion
activities in the entire world.
Human resources: Furthermore, FedEx will have to
ensure the staffs in customer support department
and marketing department are enough in order to
support customers in the effective and fast way.
FedEx also needs to contract with newspapers,
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magazines and television for promotion activities.
To ensure this thing, FedEx should divide the
staffs in 2 departments in to small groups and each
of small group will undertake one step of works.
For example, FedEx will divide customer support
department into 3 groups and marketing department
into 4 groups.
Increase the market
share in potential foreign
markets such as Vietnam
Improve the competitive
ability of FedEx to
compete with other
competitor
Making the new projects that will help FedEx
runs its business in new markets
Advertising to customers the information about
services of FedEx through the internet,
television, newspapers, and magazines to
improve the competitive of FedEx so FedEx
will have the advantage is the competition for
market share with other competitors
FedEx will have to ensure about the quality of
staffs in business planning department, they
actually must be most skilled people and have
professional behavior. (Human resources). FedEx
should make a team includes examiners based on
them FedEx can choose and hire good staffs.
FedEx also needs to contract with newspapers,
magazines and television for promotion activities
based the human resources from marketing
department
Invest more money in
the process of improving
technology innovation.
Improving the technology innovation, it is
easier for FedEx to create new services for
new markets.
Financial resources and human resources: FedEx
has to have strong financial and a good department
for training employees to maintain the process of
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Improve the quality of
FedEx’s employees
FedEx has to train its staffs to become people
who have good skills and professional
behavior after that FedEx will divide them into
development teams in order to research for
creating new alliances and services
improving the technology innovation and after that
create new services for new markets. FedEx should
invest about $4 billion for the process of improving
the technology innovation.
Figure 8: Resources for each activities
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5. Target and timescales for achievement in FedEx to monitor a given strategy
a. Action plan for each department in line with objectives of different stages
Strategy stage 1
Department: Marketing, Customer Support
Objective Main activities Target Time
Maintain the existing
customers and increase
the number of new
potential customers.
Increasing the frequency
of transactions per
customer and make each
of customers use
The staff of Customer Support Department
will be divided into 2 main groups.
Group 1: They will have responsibilities to
receive customers’ requirement or complain
directly face to face in service center of FedEx.
Group 2: They have to answer customers’
questions through telephone center or the
official website of FedEx
Group 3: they have mission to communicate
with potential or old customers about the gift
or discount prices policy for them.
The Staff of Marketing Development will be
divided into 4 groups
Group 1: they are people who give the ideas
about marketing campaigns and after that they
Increasing the loyal of customers and
built good reputation of FedEx in
customers’ mind.
To make more new customers know
about the service of FedEx it leads to
the number of customers and also the
growth of profit
3
years
2 first
years
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services more will make these campaigns are detailed.
Group 2: They have responsibility that is
contacting directly to television, newspaper,
and magazines and after that make the
contract.
Group 3: they are people who determine the
target market which the promotion activities
aim to.
Group 4: They will hand the problems which
related to the financial of promotion activities
to ensure that the money invested into
promotion activities will be matched with the
financial situation of FedEx Company.
Figure 9: Strategy stage 1
Strategy stage 2
Department: Marketing, Business Planning
Objective Main activities Target Time
Increase the market
share in potential
foreign markets such as
Vietnam
FedEx will make a team which includes skilled
examiner who have experience in order to help
FedEx can hire good skilled and professional
behavior staffs who can work in Business
Planning Department to make new projects
Joining in the new markets in the easy
way to increase the market share.
4
months
19
Improve the competitive
ability of FedEx to
compete with other
competitor
that help FedEx joined in effectively new
markets. Furthermore, FedEx divides Business
Planning Department into 2 teams.
Team 1: they will make research about
potential market through understanding about
the customers’ think, their culture and
traditional.
Team 2: they will evaluate the success ability
of project when it enters one new market, if the
success ability is high, FedEx will carry out
this project.
Using same activities with marketing
department in strategy stage 1
Improving the competitive of FedEx.
Thus, FedEx will have the advantage is
the competition for market share with
other competitors.
6
months
Figure 10: Strategy stage 2
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Strategy stage 3
Department: Training, and Development
Objective Main activities Target Time
Invest more money in
the process of improving
technology innovation.
Improve the quality of
FedEx’s employees
FedEx should invest about $4 billion for the
process of improving the technology
innovation.
Create short-term and long-term training
courses in which employees will be completed
their skills.
In these training courses, FedEx still pay
salaries for them to motivate them train harder
Make the process of creating new
services easier based on the support of
technology innovation
FedEx will divide them into
development teams in order to research
for creating new alliances and services
To support the process of creating new
alliances and services
1 years
8
months
Figure 11: Strategy stage 3
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b. Measurement
Firstly, in order to evaluate the success of five years objectives FedEx need measure the
effectiveness of the activities and the sub-objective which will be done by departments.
To measure the effectiveness of activities FedEx should consider about the activities are
completed at the deadline time or not and consider about how each department completed
sub-objectives. Thus, FedEx can complete the five years objectives only after when it
completes the departments’ objective. The measurement will be carried out based the
differences between real achievements and expected achievements such as in number of
customers, sales and market shares. Firstly, to know about FedEx achieves the objective
of stage 1 or not, they have to know the difference of the numbers of customers of
previous years and the frequency of transactions per customer through each of years. This
difference will show the effectiveness of departments such as customer support
department and marketing department in attracting new customers and maintaining
current customers. At the end of each year, the financial department of FedEx Company
will count the sales of the FedEx and if the sales increase it leads to the increase of
revenue and it also means that the objectives of marketing department, customer support
department were archived. The market share of FedEx will be measured based on the
increase of revenue, if the revenue increases it means that the market share increase and
the objective of business planning department was archived.
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CONCLUSION
This report is supported by the information which is from the internet, magazine and the course
book BPP Business Strategy. Based on that, FedEx will have good evaluation about the
alternative strategies and FedEx can choose one of these strategies for implementation.
REFERENCES
Anon., n.d. What is Vertical and Horizontal integration?. [Online]
Available at: http://bizdharma.com/blog/what-is-vertical-and-horizontal-integration/
Clark, W., n.d. Growth Strategies. [Online]
Available at: http://www.ehow.com/info_7748386_growth-strategies.html
FedEx Coporation, n.d. FedEx Innovation. [Online]
Available at: http://about.van.fedex.com/fedex-innovation
Lynch, W., n.d. What Is "Corporate Retrenchment Strategy"?. [Online]
Available at: http://www.ehow.com/info_7890404_corporate-retrenchment-strategy.html
Richards, L., n.d. Advantages & Disadvantages of Limited Growth Strategies. [Online]
Available at: http://www.ehow.com/info_8532268_advantages-disadvantages-limited-growth-
strategies.html
Sherman, F., n.d. Advantages & Disadvantages of Limited Growth Strategies. [Online]
Available at: http://smallbusiness.chron.com/advantages-disadvantages-limited-growth-
strategies-41321.html
Thompson, J. L., 2001. Understand Corporate Strategy. s.l.:s.n.
BPP, Business strategy course book 2012
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