Expansion Strategies Ppt

8/12/2019 Expansion Strategies Ppt

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Expansion strategies


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Why Do Companies Go

For ExpansionStrategies?


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To avoid annihilation in a restless and

competitive environment an organizationseeks growth as a long term goal.

It provides opportunities and is crucial for

survival of enterprise.

It helps maintain a competitive position .

Hence to survive and flourish an organization

adopts expansion strategy.


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Expansion through intensification

Expanding within existing line of business

Safeguarding the present position and

expanding in the current product-market

space to achieve growth targets


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Useful for the companies that have not fully

exploited the current product-market domain

Increasing its size of operations in its primary

business.


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Ways of Intensification

market penetration

market development

product development


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Internal Expansion Considerations

Net Present Value

Competitive Behavior

Internal Environment Scanning Financial, Technological , Managerial

Capabilities

External Environment Scanning


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AnsoffsGrid
http://2.bp.blogspot.com/-Cu1wYT6f60g/ULDH7GxiqYI/AAAAAAAAA3k/tDZ2FrcIO7w/s1600/Ansoff's+Grid.jpg


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AnsoffsProduct-Market Expansion

Grid

Market Penetration: The firm seeks to achievegrowth with

existing products in their current market segments,

aiming to

increase its markets share.

Market Development: The firm seeks growth bytargeting its

existing products to new market segments.


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Product Development: The firm 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


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NestleMarket Penetration

One of the largest confectionary

manufacturers

. Nestleslatest move to consolidate its

positionand compete with Cadbury,

McVities and Marsinvolves a market

penetration strategy using its popular Aero

chocolate bar.

minimal risk albeit the pay-off is limited


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ideal for large firms with maturing products

how need to simply maintain

their competitiveness, like Nestle

The latest enhancement tothe Aero bar is to

extend the brand further; this Easter a new

Aero Biscuit

market penetration aids Nestlescompetitive

strategy


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Fundamental differentiation strategy used

by Nestle to position Aero as a lighter andhealthier chocolate bar remain as part of the

actual productthe core and augmented

product benefits are also relatively similar to

the traditional bar

extension strategy, which aims to prolong the

life span of a mature product to prevent a

decline in salesthus, the product can

continue to fit in the firms wider product

portfolio as a Cash Cow


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Microsoft KinectMarket

Development

Simplicity

Kinect is an extension strategy for the original

Xbox 360, but is targeting a new consumer

Microsoft intended to prolong the life of the

Xbox 360 by opening it up to casual gamers

Product easy to understand and use.

push marketing strategy


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Microsoft gave retailers free Kinects and TVs

to allow consumers to try the product in-

store.

Business-to-business marketing strategy

Kinect requires no peripherals or controllers

or even knowledge of how to play video

games


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Social appeal

Emphasized the social appeal of gaming Kinect with friends; the boxing game is

particularly a great laugh!

truly enhancesthe consumers experience

more consumers understand your

product, and then a higher proportion

of these consumers will talk about the

product


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EXPANSION THROUGH iNTEGARATION

Firms use integration to-

Increase market share

Avoid the costs of developing new products

Reduce the risk of entering new busines

Speed up the process of entering the market,

Become more diversified

To reduce the intensity of competition bytaking over the competitors business


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Vertical Integration

Integration of firms involved in different stages

of supply chain starting from raw material to

delivery of final product to the end customer

It can be backward integration of forward

integration


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Nirma -backward integration by setting up plant to

manufacture soda ash and linear alkyl benzene,both important inputs for detergents andwashing soaps, to strengthen its hold in thelower-end detergents market.

DCM, Mafatlal and National Textile Corporationhave set up their own retail distribution systemsto have better control over their distribution

activities.


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Digital Gaints To Accelerate vertical

Integation

Samsung Electronics and LG Electronics planto streamline production

manufacture top-of-the-line products like cell

phones and digital TVs in a self-sufficientfashion

LG Group will invest 30 trillion won by 2010 to

develop certain electronic components thatinclude system integrated chips, plasmadisplays and camera modules.


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Samsung Electronics already retains a strong

portfolio, comprising

Samsung Corning (display-specific glass),

Samsung SDI (displays)

Samsung Electro-Mechanics (camera modules),

Aims to further hone its push for verticalintegration


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Horizontal Integration

The acquisition of additional business in the same

line of business or at the same level of the value

chain (combining with competitors) is referred to

as horizontal integrationAditya Birla Groups acquisition of L&T Cements

from Reliance to increase its market dominance is

an example of horizontal integration. This sort ofintegration is sought to reduce intensity of

competition and also to build synergies.


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Expansion Strategies Ppt