MAINTAIN AND DEFEND YOUR CORE BUSINESS
The expansion strategy reveals the firm’s eagerness for growth in terms of profit maximization.
The reasons for the expansion could be survival, higher profits, increased prestige, economies of scale, larger market share, social benefits, etc. Lowering your cost to serve through the use of new technology ensures you stay competitive in your core business.
Lower the cost to serve
The business activities are closely aligned to the current business. As ‘Business Expanders’ we develop your growth through improvements and refinements on existing business offering, processes and practices. We follow concentrated growth strategies (product- and market development and horizontal integration) and vertical integration to accomplish your objectives.
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.