The exit strategy essay
The exit strategy will focus on the optimal exit, when the business reaches the peak in its development, when it remains attractive for investors, on the one hand, and allows maximizing profits of the business owner after the exit. In this regard, it is possible to suggest three key strategies, including exiting, when the new product introduced in the market reaches the maturity stage; existing, when the company expands its business nationwide; and exiting, when the company employs 1,000 employees.
The existing strategy based on the product lifecycle is efficient, when the company introduces an innovative product in the market and boosts its business development fast. As a result, the company’s owner rips of maximum profits until the product’s lifecycle reaches the maturity stage, when the profit is stable and high (Benfari, 1999). In such a situation, the company is still attractive for investors, while the owner of the company still can sell the business at the high price.
Existing strategy based on the nationwide business expansion, implies that, when the company’s network covers 80% of the territory and population of the country, this is the high time to exist (Benfari, 1999). If the business operates nationwide, the company has reached the high level of development, its profits are high but, to keep growing further, the company needs investments to enter international markets. otherwise, the company will stumble. Hence, existing at this moment, will bring profits to the owner and will be interesting for investors.
Finally, existing, when the number of employees reaches 1,000 is attractive for investors, because they invest in a large and growing business, while the owner of the business can count on solid return on investments in the project as he/she exits the business (Dannreuther & Lekhi, 2000).
Part 2
My communication with the former owner of XYZ Inc. revealed the fact that the owner of the business has planned existing strategy, when he was just planning the business. In such a way, I have learned that, when one decides to start a business, he/she should elaborate exiting strategy and exiting plan. Otherwise, as my interviewee pointed out, it may be too late to exist and the business owner is likely to suffer unreasonable loss of profits at the moment of selling the business (Garvin & Artemis, 1997). As for his personal experience, he has decided to sell business, when his company has reached the target market value (Lim, et al., 2006). This strategy was based on the accurate industry analysis since the business owner calculated that the particular market value will mark the high level of the market saturation and the moment, when the competition becomes extremely costly as the company has to confront behemoths of the industry. In such a way, the owner of the company preferred to exit and to sell his business to a larger company instead of challenging leaders of the industry (Blanchard & Bowles, 1993). Such strategy was apparently very cautious but brought the business owner considerable profits that allowed him to launch a new business.
In fact, this week taught me a lesson concerning the importance of the existing strategy. Before, I believed that existing is important but not determinant part of the marketing plan and strategy. However, as I have found out the right time to exit is probably as important as the right time to enter the business.
