Whether new or old, every business desires some form of growth and expansion to continue in business – and the ultimate essence of all businesses is continuity. The process of continuity in business involves the idea of growth, diversification, expansion, and merger and acquisition among other things.
This post is geared towards explaining the basic concepts of business growth, diversification, and expansions as well as merger and acquisitions.
The concept of business growths
The growth of a business is measured in terms of volume sales and the company’s ability to meet the needs of the customers via satisfactory products. And the only way for a company to be certain that people out there fully accept and utilizes its products and services is when there is a sales increase. Whether new or existing customers, the more products are sold the more a business is certain it is doing something right.
When product sales start to decline, a company tries to save its business by identifying other potential customers within a given market or in new geographical areas.
Adding new customers to existing ones can broaden the base of a business and can shore up the solidity of a business. But where reaching and cultivating new customers in new geographical areas is too capital intensive and almost impossible, a business might decide to repackage existing products for existing customers.
Repackaging old products for existing customers might be the best thing to do to save a business where it becomes apparent that developing and launching new products is pretty expensive and out of the way.
Repackaging or modifying the looks of old products usually solves the problems of declining sales and boosts the patronage of new and old customers. But there should be enough adverts and publicity to alert customers to the fact that repackaged products are the same old products they had always known and used.
The concept of business diversification
Diversification usually entails the idea of developing new products to serve the same customers in a given market or new customers in a new geographical area. For instance, a business producing toothpaste may diversify into producing toothbrushes or other mouthwash to reach the same customers.
It is always best to diversify or expand or branch out into new products or new markets where a business’ reputation and existing products have been known so as to leverage on the quality brands of old products and goodwill of old customers to move businesses forward.
The concept of business expansions – merger and acquisitions
Merger involves the coming together of two or three similar businesses to form a new corporate whole. It is like when two similar businesses combine their resources together to work for common goals and mutual objectives under a single name and management.
Where two business rivals are jostling for limited customers, they may decide to merge together as a single business under reconstructed management to dominate the market.
Acquisition, on the other hand, involves the total purchase of one ailing business by another stronger business. An acquisition may involve the outright purchase or complete takeover of one business by another, and it may also mean the acquisition of the majority shares of another company in exchange for cash and securities.