CASE STUDY Flashcards
What are the types of business expansion?
Geographic expansion - opening new stores or branches in different regions, states or countries
Product expansion - adding new products or services to your offerings to reach new customers
M&A - horizontal merger (combination of two businesses in same industry); vertical merger (combining firms at different stages of production and distribution); conglomerate (unrelated businesses merge)
Franchising - allowing companies to expand without costs and risks associated with opening new locations
Strategic partnerships - where companies collaborate typically on marketing efforts
What four areas should be considered when expanding a business?
Company, Customers, Competitors/Market and Product
What information about a COMPANY should you consider?
1) Financial situation - are they highly leveraged, have they got strong working capital, is it enjoying healthy profits?
2) What are its key strengths and weakness, to identify any USPs? This helps identifying whether it is well-positioned to penetrate a market.
What information about a PRODUCT should you consider?
1) Are there other superior products / services available in the market?
2) What stage of the product life cycle are its products? If growing, then maybe a good idea to expand
What information about CUSTOMERS should you consider?
1) What are the key customer segments in the company’s market and how does this compare to segments in the market?
2) Are the company’s customers price-sensitive? If so, can the company offer competitive pricing (lower or equal) alongside its competitors?
What information about COMPETITORS/MARKET should you consider?
1) Growth rates of product segments in the market the company is entering
2) Key players in the market and their respective market shares. If fragmented and not particularly well-established, expansion seems attractive
3) Legal environment. Are there strong patent laws? If not, competitors could easily copy the company’s products
