Strategy illustration Strategy theory

Business Expansion

Businessexpansion presents potential benefits and drawbacks, some owners even unwilling to take the risk of growing a business, instead deciding to stay small. It’s never certain that expansion plans will be successful and can result in loses to profit. There is, however, a disadvantage to actively avoidinggrowth, as smaller businesses can be at a cost disadvantage compared to larger scale rivals. To compete, smaller firms need to contend on service and/or quality.

When a business grows it gains a competitive edge over smaller rivals. Larger firms have more influence over market price and they’re also big enough to be price setters. A larger business may have lower unit costs due to its size, able to buy materials cheaply and in bulk, and also spread the costs of expensive marketing campaigns and overheads across larger sales.

Ways in which a business can expand include:internal growth, where the business grows by hiring more staff and equipment in order to increase their output;external growth, where mergers or take-overs combine two firms, increasing the scale of operation, andfranchising where a business will lease its ideas to franchises, allowing new branches to open both nationally and globally.



Supporting Documents

These downloads will help to put strategy theory into context using real world examples from real businesses.

Innovation in infant nutrition
Cow & Gate logo

Find out how Cow & Gate used strategy theory to succeed in the food & drink industry by downloading our premium case study.

Creating a winning marketing mix
JD Sports logo

Learn how JD Sports used strategy theory to prosper in the retail industry by downloading our premium case study.

Creating the right marketing mix
Motorola logo

Learn how Motorola employed strategy theory to thrive in the telecommunications industry by downloading our premium case study.

Using sports marketing to engage with consumers
Kia Motors logo

Discover how Kia Motors applied strategy theory to thrive in the automotive industry by downloading our premium case study.

Live, breathe and wear passion
Diesel logo

Discover how Diesel applied strategy theory to succeed in the fashion industry by downloading our premium case study.