EXPANSION STRATEGIES
EXPANSION STRATEGIES
Every enterprise seeks
growth as its long-term goal to avoid annihilation in a relentless and ruthless
competitive environment. Growth offers ample opportunities to everyone in the
organization and is crucial for the survival of the enterprise. However, this
is possible only when fundamental conditions of expansion have been met. Expansion
strategies are designed to allow enterprises to maintain their competitive position
in rapidly growing national and international markets. Hence to successfully compete,
survive and flourish, an enterprise has to pursue an expansion strategy. Expansion
strategy is an important strategic option, which enterprises follow to fulfil their
long-term growth objectives. They pursue it to gain significant growth as opposed
to incremental growth envisaged in stability strategy. Expansion strategy is adopted
to accelerate the rate of growth of sales, profits and market share faster by entering
new markets, acquiring new resources, developing new technologies and creating
new managerial capabilities.
Expansion strategy
provides a blueprint for business enterprises to achieve their long term growth
objectives. It allows them to maintain their competitive advantage even in the
advanced stages of product and market evolution. Growth offers economies of scale
and scope to an organization, which reduce operating costs and improve earnings.
Apart from these advantages the organization gains a greater control over the
immediate environment because of its size. This influence is crucial for
survival in mature markets where competitors aggressively defend their market
shares.
Conditions for Opting for Expansion Strategy
