Expansion

Strategies
Dr. Shweta Bajpai
 Types of Expansion strategies
Expansion through Concentration
Expansion through integration
Expansion through diversification
Expansion through co-operation
Expansion through
Internationalisation
Expansion through digitalisation
 CONCENTRATION STRATEGIES

When an organisation focuses on

intensifying its core businesses with a
view on expanding through either
acquiring a new customer base or
diversifying its product portfolio, it is
having a concentration strategy
IGOR ANSOFF’S PRODUCT-MARKET MATRIX
 Market Penetration - the firm seeks to achieve
growth with existing products in their current
market segments, aiming to increase its market
share.
 Market Development - the firm seeks growth
by targeting its existing products to new market
segments.
 Product Development - the firms develops new
products targeted to its existing market
segments.
 Diversification - the firm grows by diversifying
into new businesses by developing new products
for new markets.
 TYPES OF CONCENTRATION STRATEGIES

MARKET PENETRATION – Selling more

products in the same market
MARKET DEVELOPMENT – Selling
same products to new markets
PRODUCT DEVELOPMENT – Selling
new products to the same market

Example:
Bajaj Auto has undertaken all the above
mentioned strategies
 INTEGRATION STRATEGIES

Integration means combining

activities related to the present
activity of a company
Integration is part of the
diversification strategy
It widens the scope for a company as
far is the market penetration is
concerned.
 TYPES OF INTEGRATION STRATEGIES

Horizontal Integration
Vertical Integration
 HORIZONTAL INTEGRATION

Horizontal Integration: When an

organization takes up the same types
of products at the same level of
production or marketing process, it is
said to follow a strategy of Horizontal
Integration (Also known as
Merger/Acquisition)

Example: Takeover of Satyam by

Mahindras
 VERTICAL INTEGRATION
 Vertical Integration: Expansion to serve
its own needs. Vertical Integration is of
two types, namely Backward and
Forward Integration
- Backward Integration means going
back to the source of raw materials
(Example: A Thermal power company may
do coal-mining)
- Forward Integration implies moving
closer to the finished product
(example: A car spare parts
manufacturer would start manufacturing
passenger cars)
 DIVERSIFICATION STRATEGIES
Concentric or Related Diversification
Conglomerate or Unrelated
Diversification
 CONCENTRIC OR RELATED
DIVERSIFICATION
When an organization takes up
related activities within a wider
industry situation, it is termed as
“Concentric Diversification”

Example:
A sewing machine manufacturer starts
manufacturing Kitchen appliances
(Wider Industry situation – Women
as concentrated target group, Kitchen
appliances as concentrated product
range etc)
 Types of Concentric
Diversification
Marketing
Marketing- Technology- and
related related Technology-
concentric concentric related
diversification diversification concentric
diversification
 CONGLOMERATE OR UNRELATED DIVERSIFICATION

Conglomerateisora Unrelated
A conglomerate combination of two
Diversification
or more corporations engaged in entirely
different businesses that fall under
one corporate group, usually involving
a parent company and many subsidiaries

In other words, a conglomerate takes

up such activities which are unrelated
to the core business.
 EXAMPLES OF CONGLOMERATES
TATA GROUP
ADITYA BIRLA GROUP
ITC GROUP
TTK GROUP
RELIANCE
ORGANISATIONS WHICH SELDOM DIVERSIFY

Public Sector Enterprises

Non Government Organisations
(NGOs)
 REASONS OF DIVERSIFICATION
Minimizing Risk
Capitalize on Strengths
Provide a new perspective in business
 Risks of Diversification
Unrelated diversification is complex
and confusing
Diversification demand a wide variety
of skills
Decreasing commitment on the core
business
Often results in losses
Increases the administrative costs