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Business Jargons

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.

Related terms:

  1. Stability Strategy
  2. Retrenchment Strategy
  3. Expansion through Concentration
  4. Grand Strategies
  5. Combination Strategy

Reader Interactions

Comments

  1. IndiaBizClub says

    December 20, 2016 at 3:10 pm

    Good article.

    Reply
  2. Johanna says

    June 24, 2018 at 1:54 pm

    Very interesting. Thanks.

    Reply
  3. Esraa Alaa says

    August 16, 2018 at 12:57 am

    Well briefed article and to the point , thanks alot

    Reply
  4. osborn says

    March 27, 2019 at 2:05 am

    thank you! you made things easy to understand..

    Reply
  5. Bright says

    June 3, 2019 at 12:20 am

    Simple and clear explanation…I am a management student of the University of Port Harcourt, Nigeria and your article had be very useful.

    Reply
  6. okedi richard says

    October 28, 2019 at 4:05 pm

    thanks for the good work

    Reply
  7. Donatella says

    February 13, 2020 at 10:05 pm

    Thank you so much. This is such a helpful and a good work.

    Reply
  8. Yad says

    January 9, 2022 at 7:13 pm

    It is interesting. Who is the author? and publish period?

    Reply
  9. Kaviya says

    April 22, 2022 at 6:51 am

    So easy to understand and it helped me a lot

    Reply
  10. Chan says

    April 9, 2023 at 12:07 pm

    It’s brief and easy to understand. Found it useful for my exam. Thanks for the article

    Reply

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