Definition of Expansion, Types, Stages, Strategies and Examples
Definition of Expansion
The term of this expansion is very often used in all kinds of fields of science, such as; politics, economics, and physics. However, of course the word "expansion" has a general meaning that forms the basis for its use in certain fields of science.
In general, the meaning of this expansion is a process or also an action taken so that something becomes bigger or wider. Etymologically, the word "expansion" comes from the Latin 'expandere' which is then absorbed into English, namely "expansion" (basic word "expand") which means to spread.
According to the Cambridge Dictionary, the word expansion means an effort to increase in terms of size, number, or importance. In other words, the term "expansion" refers to an action in making something bigger or also increasing.
Meanwhile, according to the Big Indonesian Dictionary (KBBI), the word expansion has several definitions, depending on the field of science or also the context discussed. below is an explanation of the meaning of expansion put forward by the KBBI, including;
Economy: this expansion is a process of expanding the circulation of money into circulation.
Physics: this expansion is a process of expansion (especially gas and steam), the gas expansion occurs when heated.
Politics: This expansion is a process of expanding the territory of a country by occupying (partly or wholly) the territory of another country; namely regional expansion.
The above has been explained about what expansion is, both in its general understanding and also in several fields of science. Well, for novice businessmen, of course, they also need to understand this term, starting from the understanding and also the type of expansion in the economic and business fields.
Economic Expansion
In general, the meaning of expansion in the economic field is an effort made to increase economic activity as well as the growth of the business world.
Referring to the dictionary of Bank Indonesia, this economic expansion is an economic development in a conjuncture pattern. In this case, the conjuncture pattern is a process of ups and downs of progress and economic decline that occur one after another.
Usually the economic development is marked by an increase in prices, an increase in the amount of money circulating in the community, an increase in production, and also an increase in consumption.
Business Expansion
In general, the notion of expansion in business refers to all kinds of activities or activities to enlarge or also expand the business network of a company, be it from the production side or also from the distribution.
To be able to complete the explanation about expansion in business, then we need to refer to the opinions of several experts including:
1. Financial Services Authority (OJK)
According to OJK, the definition of expansion is an activity or activity to enlarge or expand a business characterized by the expansion of facilities, the creation of new markets, recruitment of employees, and etc. This expansion can also be defined as an increase in economic activity and also the growth of the business world.
2. Bambang Riyanto
According to Bambang Riyanto, this expansion is a process of expanding capital, both fixed and working capital within a company.
3. Alex S. Nitisemito
The definition of company expansion is an effort made by a company to be able to increase the size of the company (ie production capacity, that's market coverage) which is caused by the increasing demand for a product that generated.
4. Suad Husnan and Enny Pudjiastuti
According to Suad Husnan and Enny Pudjiastuti, this economic expansion is a business expansion process by through the addition of new capital, increasing factory capacity, adding production units, or also mergers and acquisition.
Market Expansion
This market expansion is an attempt to penetrate new markets by a company, namely with the products it owns. This is done by reaching out to existing or existing markets in new geographic points so that both new users know and use their products.
Credit Expansion
This credit expansion is an effort to increase the number of loans from the Bank. The definition of credit expansion is an activity or activity to increase the amount of credit. Credit itself is a provision of money or bills based on a loan agreement between the bank with other parties that require the borrower to be able to carry out, namely the amount of interest is as follows: reward.
Types of Expansion in Business
In the business field, there are several types or types of expansion carried out by a company. The following is a brief explanation of several types of expansion including the following:
1. Merger
This merger is a merger of two or more companies and become a single entity. This is one of the efforts in business expansion, in which the dominant company will remain maintain its identity, while for a weak company it will disappear more and more identity.
2. Acquisition
This acquisition is a takeover of the ownership of shares or assets of a company by a group of investors. This type of expansion is usually carried out to maintain the availability of raw material supply or also to guarantee that the product will be absorbed by the market.
3. Hostile Take Over
Hostile Take Over is a form of acquisition of a company that is carried out by force. The expansion effort is carried out by opening an offer for shares of companies that want to be controlled in the capital market, namely at a price above the market price.
4. Leveraged Buy Out
Leveraged Buy Out is an attempt to control a company by borrowing money (debt) to buy another company.
8 Effective Strategies for Business Expansion
Make a Careful Plan
Before you decide to then expand your business, make a plan as carefully as possible. This will certainly help you to or not to lose control of your previous business. Apart from that, a careful plan can also make it easier for you to direct where the new business will be taken later.
Adding New Products and Services
Your business may already have mainstay products and services that have a significant number of consumers. But there is nothing wrong if you add new products and services that are different from before. This method can or can be taken by giving your business an interface, namely by switching to lines that have never been tried before.
Actively Promote
It is possible that with the expansion of the business, the products issued can or as good or maybe even better when compared to the product in the business previous. However, no one will know this if you don't show it to consumers. You have to explain why the product is the best, and also invite consumers to want to use it. This of course can or can be realized by doing promotions.
Looking for New Target Market
If your business creates products and services that are different from the previous business, of course you need to target different consumers and also suit the product. But the search for a new target market does not mean you can't or can find a target market for the previous product. If you believe that you can expand your business, you can still or can bring old products and then market them in different areas. This expansion strategy is intended to be able to find other possible target consumers who are suitable for your products and services.
Opening a Branch
If you have seen developments in your main business, consider opening a new branch to expand your reach to consumers. You can or can choose to open a new branch in the same area or a different one. Branches located in the same area are usually used to help your business serve consumers who may not be able to or can be served by the main branch. If the goal is to get more profit, that is by opening a branch in another area, which one? competition for products is also not too tight, as well as to reach new consumers in the region or area that is different.
Applying the New Sales System
In this all-digital era, there are various sales options other than just relying on physical stores. People in droves will change their consumption method, namely by shopping using online stores. Activities in buying in the online world is certainly simpler.
Mutually Beneficial Cooperation
Another strategy that can or can be taken to be able to expand this business is to collaborate with various partners, be it complementary companies or even your competitors. Of course this cooperation must also be mutually beneficial.
Buying Competitors
In addition to using the cooperative method, the business expansion can or can be directly carried out by buying competing companies. This is usually done when the competitor is going through a tough time. The purchase can or can be done in two ways, namely by means of mergers or acquisitions.
3 Stages of Business Expansion
1. Make a Careful Planning in Advance
A business without good planning is a business that is not ready to grow, nor does expansion.
The business is ready for expansion due to current sales and a significant number of regular customers.
In the next five years, the business must have its own product, namely with its own brand and can or can be produced by itself.
The market is already very wide and the demand is also very large, so it is then necessary to present a new market to accommodate sales.
New employees are certainly needed so that all forms of operational activities or activities can be or can be sustainable, and also the sales process will be faster and more effective.
2. Determine How the Business Model Will Be
When expanding, the business model will never be the same as before. In the long stages, new standard operating procedures or (SOPs) will be needed, as well as If you have a new employee, this activity or business activity will also change drastically slowly.
3. How Much Capital Is Required in the Process?
During expansion, business capital will certainly be needed. To be able to pay employees, rent or also build a new warehouse, buy an online store, build a shop physically, to build your own production plant, of course it will require capital that also does not a little.
You can just use the profit from your sales so far, namely as capital. However, there is a possibility that your cash flow will be disrupted to carry out current business activities or operations before expansion.
Expansion Example
As described regarding the described expansion, this expansion is an activity or activity that enlarges and also expands economic business. as for example of this expansion is PT. Semen Gresik Tbk, which later formed a holding company or holding company for Semen Gresik.
Thus an explanation of the Definition of Expansion, Types, Stages, Strategies and Examples, hopefully what is described can be useful for you. thank you
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