A presentation of my recent lecture at a Business School

1. Expansion
Strategies
Dr. Sandeep Kulshrestha

2. Types of Expansion strategies
Expansion through Concentration
Expansion through integration
Expansion through diversification
Expansion through co-operation
Expansion through
Internationalisation
Expansion through digitalisation

3. 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

4. IGOR ANSOFF’S PRODUCT-MARKET MATRIX

5.  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.

6. 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

7. 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.

8. TYPES OF INTEGRATION STRATEGIES
Horizontal Integration
Vertical Integration

9. 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

10. 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)

11. DIVERSIFICATION STRATEGIES
Concentric or Related Diversification
Conglomerate or Unrelated
Diversification

12. 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)

13. Types of Concentric
Diversification
Marketing
Marketing- Technology- and
related related Technology-
concentric concentric related
diversification diversification concentric
diversification

14. CONGLOMERATE OR UNRELATED DIVERSIFICATION
A conglomerate is a Unrelated of two
Conglomerate or combination
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.

15. EXAMPLES OF CONGLOMERATES
TATA GROUP
ADITYA BIRLA GROUP
ITC GROUP
TTK GROUP
RELIANCE

16. ORGANISATIONS WHICH SELDOM DIVERSIFY
Public Sector Enterprises
Non Government Organisations
(NGOs)

17. REASONS OF DIVERSIFICATION
Minimizing Risk
Capitalize on Strengths
Provide a new perspective in business

18. 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