Farrah’s Furniture sells modern desks, chairs, and other office furniture mainly to businesses and institutions. An example of Farrah’s pursuing a growth strategy would be Multiple Choice selling the business to a larger competitor. expanding to sell home furnishings offering their desks in additional colors. replacing the sales manager after she retires.
The Correct Answer and Explanation is:
Correct Answer: Expanding to sell home furnishings
Explanation (300+ words):
Farrah’s Furniture currently focuses on selling modern desks, chairs, and other office furniture primarily to businesses and institutions. A growth strategy refers to any plan or action that aims to increase a company’s size, revenue, market share, or profitability. This often includes expanding product lines, entering new markets, or increasing distribution channels.
Among the options provided, “expanding to sell home furnishings” is the clearest example of a growth strategy. This action would broaden the company’s target market from just businesses and institutions to also include individual consumers. By tapping into the residential market, Farrah’s would be increasing its potential customer base and revenue streams. This type of expansion is known as diversification, where a company ventures into new products or markets that differ from its current operations. If executed effectively, this could significantly boost Farrah’s market presence and profitability.
Let’s examine why the other options do not represent a growth strategy:
- Selling the business to a larger competitor is not a growth strategy for Farrah’s—it’s actually an exit strategy. This indicates the end of the company’s independent operations, not its expansion.
- Offering their desks in additional colors is a minor product variation and may improve customer satisfaction or appeal slightly, but it doesn’t significantly expand the company’s market reach or revenue. It’s more of a product refinement rather than a substantial growth initiative.
- Replacing the sales manager after she retires is an internal operational change, not a strategic growth decision. It maintains business continuity rather than enhancing business growth.
In conclusion, expanding into home furnishings is a strategic move to grow Farrah’s Furniture by entering a new market, aligning best with the concept of a growth strategy.