Expansion Strategies

1. RAJEEV GUPTA
0
MGNM571
Corporate Strategy
&
Entrepreneurship-I

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LEARNING OBJECTIVES
Ability to understand and define integration
strategies. Demonstrate ability to identify
appropriate Business predicaments to apply
integration strategies,
Ability to define and differentiate between
various Diversification strategies.
Demonstrating ability to identify appropriate
business predicaments to apply pursue
diversification strategies.
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3. This strategy aims at high growth by substantially
broadening the scope of one or more of its businesses. It
aims at the improvement of its overall performance in
business.
There may be five types of Expansion Strategies.
 Concentration
 Integration
 Diversification
 Cooperation
 Internationalization
EXPANSION STRATEGY

4. It is a strategy which works on the possibility of mutual
cooperation with competitors; with the competition also going
at the same time.
Mergers:-
It is a strategy of two or more organisation in which one
acquires the assets and liabilities of the other in exchange of
share or cash.
Conglomerate mergers (2 unrelated firms)
Horizontal mergers (2 firms in same business)
Concentric mergers (2 related firms)
Vertical mergers (2 firms creating complementary products)
D) EXPANSION THROUGH COOPERATION

5. Takeover
It is a strategy where an attempt is made by one firm to
acquire ownership or control over another firm against the
wishes of the latter’s management.
Joint venture
It is a strategy where two or more companies combine to
form a new company in order to make use of the strengths
of the partners to gain access to a new business. Eg.
Maruti-Suzuki.
Strategic alliance
Two or more firms unite to pursue a set of agreed upon
goals but remain independent subsequent to the formation
of the alliance.
D) EXPANSION THROUGH COOPERATION

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12. Low
High
Cost
Pressures
Global
Strategy
Transnational
Strategy
International
Strategy
Multidomestic
Strategy
Low High
Pressure for local Responsiveness
These are the types of expansion strategies that require firms to
market their products beyond the national market.
E) EXPANSION THROUGH INTERNATIONALIZATION

13. • A firm using a multidomestic strategy sacrifices efficiency in favor of
emphasizing responsiveness to local requirements within each of its
markets.
• Examples:
• Rather than trying to force all of its American-made shows on viewers
around the globe, MTV customizes the programming that is shown on
its channels within dozens of countries, including New Zealand,
Portugal, Pakistan, and India.
• Food company H. J. Heinz adapts its products to match local
preferences. Because some Indians will not eat garlic and onion, for
example, Heinz offers them a version of its signature ketchup that
does not include these two ingredients.
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14. • A firm using a global strategy sacrifices responsiveness to local requirements
within each of its markets in favor of emphasizing efficiency. This strategy is the
complete opposite of a multidomestic strategy. Some minor modifications to
products and services may be made in various markets, but a global strategy
stresses the need to gain economies of scale by offering essentially the same
products or services in each market.
• For Example:
• Microsoft, offers the same software programs around the world but adjusts the
programs to match local languages.
• Similarly, consumer goods maker Procter & Gamble attempts to gain efficiency by
creating global brands whenever possible.
• Global strategies also can be very effective for firms whose product or service is
largely hidden from the customer’s view, such as silicon chip maker Intel. For such
firms, variance in local preferences is not very important.
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15. • A firm using a transnational strategy seeks a middle ground between
a multi-domestic strategy and a global strategy. Such a firm tries to
balance the desire for efficiency with the need to adjust to local
preferences within various countries.
• For example:
• Large fast-food chains such as McDonald’s and KFC rely on the same
brand names and the same core menu items around the world. These
firms make some concessions to local tastes too. In France, for
example, wine can be purchased at McDonald’s. This approach makes
sense for McDonald’s because wine is a central element of French
diets.
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THANK YOU
Rajeev Gupta