BE RESPONSIVE TO CUSTOMER NEEDS!
The expand strategy reveals the firm’s eagerness for growth in terms of short-run and long-run profit maximization. Growth resemble a kind of ladder, where lower-level rungs present less risk but maybe less quick-growth impact.
As you go about developing your growth strategy, you should first consider the lower rungs of what are known as intensive growth strategies. Each new rung brings more opportunities for fast growth, but also more risk. If you’ve exhausted all steps along the intensive growth strategy path, you can then consider growth through acquisition or integrative growth strategies.
Refining your business activities
As ‘Business Expanders’ we develop your growth through refinements on existing business processes and practices. We shape and realize firm’s offering to new geographic markets and customer domains.
Source: J.R. Schütt – DIWANIYA, 2012
Product development. Product development is an essential part of any company’s growth strategy. It allows for growth in sales and market share. Product development is the improvement of existing products or the introduction of new products into a market. This is a normal evolution in business, not just an expansion tactic. When positioned as adding value and being responsive to customer needs, this can be a relatively risk-free way to expand.
Market development. Market development is a growth strategy that identifies and develops new market segments for current products. A market development strategy targets non-buying customers in currently targeted segments. It also targets new customers in new segments. New users can be defined as: new geographic segments, new demographic segments, new institutional segments or new psychographic segments.
Vertical integration. When a company wishes to grow through a vertical integration, it is seeking to strengthen its supply chain, reduce its production costs, capture upstream or downstream profits, or access downstream distribution channels. To do this, one company acquires another company that is either before or after it in the supply chain process.
Horizontal integration. Horizontal integration allows a company to expand into new territories without the high expense of building from scratch, because an existing, profitable business is usually less expensive than the total cost of starting a new business. Horizontally integrated businesses may benefit from economies of scale. Once a company reaches a certain size, the cost of increased business operations grows at a much lower rate than the profit from those activities. Horizontal integration is increasing a business’s market share and expanding by buying up competitors through Joint Ventures, Alliances, M&A.
Co-creation. Co-creation is advocated as a means to expand the innovation and value creation capability of the firm, while nurturing customer relationships and lowering cost for marketing and R&D. The benefits of co-creating value include better product quality, greater customer satisfaction, as well as reduced risk for the firm, specifically in relation to the market entry of a new product or service.