Expansion Strategy Pratibha M.Bhide Varsha Lamb

Expansion strategy The first route of growth is to expand the present line of business. Expansion decision can be taken by considering following factors. 1.Determine organizations options for capacity expansion. 2.Assess probable future demands and costs of inputs. 3.Assess probable technological changes. 4.Predict capacity addition by competitors 5.Assess demand supply balance in the industry. 6. Determine expected cash flow from expansion. 7. Test the analysis for consistency.

Types of Expansion strategy Concentration Diversification Integration Co-operation Internationalization

Concentric Expansion strategy In this strategy expansion is achieved through Market penetration, Market development, & product development. In each case objective is to expand present business of organization. Reliance has captured substantial market share in textile yarn and intermediates.

Types of Co-operative strategy Mergers Acquisitions Joint ventures Strategic alliances

Mergers A Merger is a combination of two or more organizations in which one acquires the assets and liabilities of the other in exchange for shares or cash,or both the organizations are dissolved, and the assets and liabilities are combined and new stock is issued. Types of Merger: Horizontal Vertical Concentric Conglomerate

Reasons for Mergers Merging organizations point of view: i) Quick entry in the business ii) Faster growth rate iii) Diversification advantages iv) Reduction in competition and dependence v) Tax advantage vi) Synergistic advantage

Acquisition In acquisition strategy, one company takes over the control of another company. Hostile Takeover Planning for takeover i) Defining objectives of acquisition ii) Defining organizational Strengths and weaknesses iii) Setting task for acquisition iv) Preliminary search for the target v) Selection for the target vi) Takeover Bids vii) Takeover of the target

Strategic Alliance Strategic alliance is another form of combining the efforts of two or more organizations to develop competitive advantage. In strategic alliance, two or more partners join hands together for certain objectives, generally, for specific period. Types of Strategic Alliance i) Technological development ii) Operations and logistics iii) Marketing, sales and service iv) Single country and multicountry

CASE STUDY Hindustan Lever Limited

Expansion Through Diversification Diversification is a set of the strategies. It involves internal or external, releated or unreleated, horizontal or vertical and active and passive business defination single or jointly of business function. Business function customar group,customar function and alternative technology.

Adoptation of diversification strategies  To minimize the risk by spreading it over serveral business.  To capatalise organisational strength or minimize weakness.  Growth of existing business is blocked due to environmental and regulatory factors.

CONCENTRATIC Diversification COGLOMERATE Diversifications. Classification of diversification Stratgies

Concentratic Diversification It involves Three Types 1] Marketing releated Concentratic divesification. 2]Technology releated concentratic divesification. 3]Marketing and Technology releated concentratic divesification.

Conglomerate Divesification Organisation adopts the strategy which requires taking up those activities to the existing business defination of one or more business. For Example: Hinduja Group (Petrochemicals, Insurance, power Generation, Health Care and Telecom)

Pattern of Diversification The Post 1991 period has seen a gradual liberalisation of Indian economy. The relaxation of control has generally made a positive impact on the business policies of the firms diversified related and unreleated business activities.

Integration expansion strategy The firms deal with products with value chain extending from the basic raw material to the ultimate consumer. Among the intergration two types. A] Vertical intergration : 1) Backward Integration means retreating source of raw materials... Ex : Bajaj Motorcycle Co.

2] Forward Inegration : While forward integration moves nearer to the ultimate consumer. For Ex : Toyota B) Horizontal integration : Follow strategy Or Take over strategy. For ex. TaTa- Corus

Expansion through Corporation Global competitions brings global corporation Japanese Toshiba,SONY & US IBM agreed jointly developed advanced semiconductor processing technology. Toshiba and Samsung agreed work together to produce Dynamic Ram chip Fast Business application. Corporation also occurs auto industries French Carmaker company Renault and SA with Japanese car company Nissan.

Expansion Through Internationalizations The companies service and product beyond national and domestic market. For Ex: T V Sundram (TVS )