expansion strategies ppt
TRANSCRIPT
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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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