Strategic Management Case Study Example | Topics and Well Written Essays - 2000 words

Strategic Management - Case Study Example The expansion in this industry, may involve the increase in the products available in the market. For instance, Gucci can decide to produce more bags into the industry hence increasing their market share of the total bags in the industry. This strategy, however, can lead to overproduction in a company, which relates to oversupply in the markets (Bandinelli et al., 2013). Such situations often lead to a decline in the market prices of related commodities in the market. Apart from expansion, diversification is an internal growth approach that enables the companies to enter new business lines that not similar with the current business operations. Diversification has four major divisions namely the vertical, concentric, horizontal and conglomerate diversification. Diversification improves the marketing and economic ability of a company and enables the companies to tap into market sectors that are underperforming towards the fulfilment of customer needs (Capello & Ravasi, 2009). This strategy, nevertheless, in the Italian fashion industry, may require extreme knowledge of the industry and the prevailing trends in that particular industry. In the event that a clothing company decides to diversify into the manufacture of shoes, the company may have to invest extra funds in hiring quality professionals to produce shoes that will attract customers from the other retailers. On the other hand, external growth strategies are development plans that involve cooperation between one company and another from the same region, country or from foreign regions and countries. Collaboration is a major trend in the Italian fashion industry that involves the companies working jointly to pursue a common goal. The Valentino Fashion Group that involves the Versace, Dolce & Gabbana and the Armani Collections is an example of external growth strategy that aims at gaining