As the sector begins to recover, it makes sense for the company to plan to expand market share. This strategy requires exploiting a substantial competitive advantage in a growth market. Such exploitation can involve new technology, new products, cost leadership against competitors, a lock on the delivery system, control of the value chain, and many other forms of advantage.
Expanding market share functions on investments above the level of what regular market growth requires, with the aim of strengthening market position. Investments fund activities such as new market entry, channel expansion, regional or global expansion, penetration of new customer segments, gain in share of customer spend, product development (next generation, complements, support services), expanding steps in the value chain, and increased marketing and sales.
These are the actions and responsibilities for head offices, divisions, and business unit management teams. Their concern is to improve performance, deliver annual growth, maintain market positions, and defend profitability against competitors.
Finally, sector recovery offers the best opportunity to activate M&A as a major lever of growth. The reason is that valuations are low and competitors are weak. So, during this time, a well-positioned company can take advantage of M&A to grow along different axes of expansion, including the following:
- Establishing industry leadership
- Redefining the business scope and business model
- Transforming the industry structure
- Leading active market consolidation
- Shifting into related industries
- Adding size through bolt-on acquisitions
These are long-term strategies and responsibilities that pertain to the CEO and the board. They comprise significant moves in the industry and answer the complex question of where to look for growth in the long-term. An economic recovery makes these M&A strategies more attractive and much easier to execute than normal times.