Failsafe Strategies: Profit and Grow from Risks That Others Avoid

Part 2. The Risks in Growth and Diversification Strategy

One of the most vexing problems for a successful firm is to figure out how to grow out of the niche that brought it its success. Your firm might enter a new business either by creating (shaping) a new market or entering an existing market (adapting).^[1] You will, of course, recognize this constitutes a choice between demand risk and competitive risk. Other than creating a new industry (which we discuss in Chapter 9, Strategies to Shape Markets: Products, Process, and Platform, which has its own set of risks), most firms that try to grow out of their original niches have to consider entry into an established market. Unfortunately, a lot of firms do not apply the same principles in the new ...