A Business Encyclopedia

Expansion Strategy

Definition: The Expansion Strategy is adopted by an organization when it attempts to achieve a high growth as compared to its past achievements. In other words, when a firm aims to grow considerably by broadening the scope of one of its business operations in the perspective of customer groups, customer functions and technology alternatives, either individually or jointly, then it follows the Expansion Strategy.

The reasons for the expansion could be survival, higher profits, increased prestige, economies of scale, larger market share, social benefits, etc. The expansion strategy is adopted by those firms who have managers with a high degree of achievement and recognition. Their aim is to grow, irrespective of the risk and the hurdles coming in the way.

The firm can follow either of the five expansion strategies to accomplish its objectives:

Expansion Strategy

  1. Expansion through Concentration
  2. Expansion through Diversification
  3. Expansion through Integration
  4. Expansion through Cooperation
  5. Expansion through Internationalization

Go through the examples below to further comprehend the understanding of the expansion strategy. These are in the context of customer groups, customer functions and technology alternatives.

  1. The baby diaper company expands its customer groups by offering the diaper to old aged persons along with the babies.
  2. The stockbroking company offers the personalized services to the small investors apart from its normal dealings in shares and debentures with a view to having more business and a diversified risk.
  3. The banks upgraded their data management system by recording the information on computers and reduced huge paperwork. This was done to improve the efficiency of the banks.

In all the examples above, companies have made significant changes to their customer groups, products, and the technology, so as to have a high growth.

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *


Related pages

fixed assets turnover ratio interpretationmonopolic competitionaudit defwhat is the relationship between total utility and marginal utilitytypes of research exploratory descriptive causalexplain managerial grid in detaildeterminant of elasticity of demandstock turnover ratio formula example14 principles of management by henri fayolethnocentrism definition and examplescontingency modelquota sampling techniqueadministrative theory of henri fayolmemory jogger meaningconcept of sbuitr indiadefine maslowwhat is ethnocentrism definitiondefinition of debentured mat accountblake and mouton modelexpectancy valence modeldefinition of leveraged buyouttypes of promotion mixaccounts receivable aging scheduledefinition of autocratic leadership stylemeaning of seasonal unemploymentkisan vikas patra interestbehavioral management theory definitionsnowball approachclassical theoristswhat is contribution in marginal costingteleological and deontological ethical theoriesisoquant and its propertiestotal utility in economicsadvantages and disadvantages of borrowing moneyexplain what market segmentation isdefine unitarismgolden parachutes definitionexposed meaning in hindicorrelative analysisexample of retrenchment strategywhat is crr ratetheories of wages in labour economicsfactors that affect consumer buying behaviorwhat does moratorium meansales turnover ratio definitionporters 5 forces templatenational savings schemesdefinition of kinkedloss leader pricing definitionsnowballing samplingpayroll dashboarderg meaningclassical conditioning of pavlovexplain the trait theory of personalityauthoritarian leadership meaningeconometric techniquesdefinition of learning by skinnercash cow definitionchit fund workingdefine dashboardsq sort techniqueparticipative leadership stylesconversation between interviewer and intervieweeduality lpmonopoly normal profitisoquant curvevestibule meaningautocratic leadersethnocentric culturedefine liquidatedexamples of laissez faire leaders