Commercial strategy, search for new opportunities, product innovation or new market, Business Development encompasses a set of activities that have a common goal; the growth of the company.
1. What is business development
Business development is the set of processes intended to boost the performance and profitability of a company via, for example, the implementation of appropriate strategies, the analysis of the components of the business model, business plan, etc.
2. What does business development consist of?
Business development is the set of actions, tasks, strategies, and processes put in place to create opportunities for profitable growth in one or more organizations.
In this sense, its definition is very similar to that of business development. But beware…
Depending on the context, business development terms can have different meanings.
In a tech start-up type universe, it can be a sales job focused on the execution of a prospecting plan to develop a market.
In a larger, multinational-type company, the various business development tasks will often be shared between different people.
When we talk about new growth opportunities, you must understand that it is broader than the simple fact of prospecting new customers... This can be the creation of partnerships, prospect files, the opening of a new segment of the market, where the development of turnover with existing accounts in particular.
In short, everything that contributes to increasing the income of your business.
3. What is the role of business development?
The role of business development has evolved significantly in recent years due to advances in technology and the need for a sustainable environment. Businesses and organizations must grow their business quickly and efficiently if they are to meet the many and constant changes in the demands and needs of their customers and environment. Therefore, strong business development skills have become an important part of a company's strategic skill base. This leads more and more companies to employ "Enterprise Developers or Business Developers" to perform these essential development tasks. They ensure that the company performs well in existing markets, develops new business models, and gains a competitive advantage in new markets.
So the role of business development within a company is that of a strategist, whose work is based on identifying new markets in which to offer products. It follows that the main roles of business development are to assess the business models to follow to enter new markets and to have an in-depth knowledge of market dynamics.
In addition, business development has the role of ensuring that customers are fully satisfied. In addition, business development makes it possible to best represent the image and values ââof the company.
4. Business development strategies
Suppose a company wants to remain competitive in the market. In that case, it must constantly consider developing growth strategies, not only to improve sales, market share, profits, or organizational size but also to survive the attacks of competition, thanks to the economies of scale and the effects of experience that it offers.
From this point of view, we can distinguish four business development strategies:
Market penetration strategy: operating the same commercial format in the same market, using the same products or slightly modified products.
Internationalization strategy: opening up to other geographic markets with the same commercial format.
Vertical integration strategy: extension of the company's activities to wholesale and production.
Diversification strategy: entry into other business formats and sectors that support business activity.
5. Basic ways to grow
Business development strategies can be achieved through internal or organic growth or through external growth. The choice of one or the other will depend on several factors, such as the stage of the business formula's life cycle, the saturation of the market, the level of competition, the necessity or not for rapid growth, the existence or not of potential external partners, the level of resources and capacities of the company, etc.
Internal or organic development
Internal or organic development consists of carrying out the growth strategy through the creation of new establishments, new production plants, new representative offices of the same company, perfectly controlling the expansion, and ensuring that the entity as a whole achieves the objectives.
This strategy can also be developed by creating a new commercial formula through a subsidiary with the same or new brands. The internal development strategy has been the norm in most business development processes and is therefore known as natural growth.
Organic or external development
This is the formula for growth that we most often observe on a daily basis in the economic press. It is based on the processes of mergers, acquisitions, or alliances, through which a market is accessed through an acquired company, with the particularity that it is already in operation, which eliminates some of the costs hidden from internal growth.
When a company's business sector is saturated or wants to quickly penetrate new markets, external growth may be the preferred option. Therefore, external growth is essentially based on the purchase of other companies or on the acquisition of significant financial stakes in them.
External growth results from the control of one or more operating companies, either by simple association, such as an alliance, or by acquiring all or part of their assets by means of shares or other securities that make up their share capital. Therefore, this type of growth materializes through the acquisition of capacities and resources that already exist. From a macroeconomic point of view, it does not represent an increase in real investment or a growth in aggregate supply but a simple transfer of ownership.
6. Designing a business development plan
There are many ways to design a business development plan. Generally, there are three main stages:
Analyze the situation: consider the economic context, the competitive environment, and the main opportunities open to the company and draw up an internal situation report to identify the strengths and weaknesses of the company concerned;
Set objectives: this essentially involves assessing labor and equipment needs and estimating the gains that can be generated by improving these elements;
Establish an action plan: identification of the marketing actions to be implemented to reach the target customers and thus achieve the objectives set.