Specialization as a Strategy for Growth

Abstract

One response to the issue of specialization versus diversification is to look for many diverse market segments where specialized capabilities give a firm a competitive advantage over less focused, general practice firms. A clearly defined mission, specialized enough to distinguish a firm from other competitors in the marketplace, is essential to adapting successfully to the rapid changes of a highly uncertain and highly competitive marketplace. Several market forces have created this situation: changes in technology, shifting national priorities, aggressive domestic and international competition, and more complex client needs. Each of these areas demands greater up front investments while offering less assurance of uninterrupted long‐term returns. A firm must develop a planned response to the opportunities and threats created by these external market conditions. Trade‐offs between entering markets a firm knows very little about and adapting to the changes occurring in those areas in which it is established must be evaluated. Formal strategic planning directs attention to these trade‐offs. This article describes how one international environmental consulting firm has used the strategic planning process to drive continued growth without giving up its specialized focus.