This archive report was first published on 4 August 2019.
Published on August 4, 2019, business expansion is a crucial stage for any company after a few years of operation.
Growth and expansion are characterized by increased market share, but this should be done strategically to avoid hiccups.
One way to expand is through partnerships and strategic alliances, which can occur when two businesses collaborate on a project or tender.
For instance, some procurement entities allow applicants to form a consortium, enabling individual entities to build capacity in terms of expertise.
A partnership can be formed by admitting new owners into the business, with equity partners buying a stake and other partners admitted due to their expertise.
It is advisable to have a partnership deed in place to manage the relationship and register the new entity as a partnership.
Strategic alliances are increasingly being used for global expansion, serving as referral networks, capacity building, and accessing new markets in new territories.
Other methods of expansion include mergers and acquisitions, diversification, licensing, and franchising.
Mergers occur when two independent businesses form an entity, with the old outfit ceasing to exist and the new entity formed.
Diversification can occur where a business gets into a new sector or geographical area, while a licence or franchise can give access to global markets.
Lastly, setting up a presence in a new country by registering a new entity is a more permanent but expensive way of expansion.
