Businesses all over the world have changed during the last decade or so. With the advent of internet and the development of some unbelievable software products, the world has changed into a big shopping complex. It is no longer possible to run a business organization in isolation.
Acquisitions and mergers are the order of the day in business community. Even traditional business rivals are joining hands through mergers and acquisitions to take their business to new horizons in this rapidly changing business scenario. The recent news about Microsoft’s attempts to buy one of its main competitors Yahoo is an excellent example of this kind of business expansion.
Business organizations talk about business expansion usually when the company is doing well in its original field of business. Business expansion can be starting a new branch in some other city, starting the operations in a new domain, increasing the employee strength, implementing new technology or acquisition of some other organization in a related field or in the same field. Business expansion is something that should be done with great care and after a good deal of research. There were cases in history where acquisitions and ill-advised forays into an entirely unfamiliar domain have destroyed smoothly running companies.
Generally, business expansion does wonders to the development of an organization. It provides an additional impetus to the organization to do well in every field. It provides a sense of confidence and well-being in the minds of the employees and investors, which should reflect well in the balance sheet of the company. Also, when an organization opens a new branch or increasing the employee strength, the productivity level will surely increase. It provides more options to the organization to do a particular job. This kind of news will surely give the customers a strong sense of confidence to deal with the organization. Another important aspect of business expansion is the effective utilization of funds. If there is a good opportunity to do a particular kind of business at a particular time, somebody is going to do it. So if an organization spots an opportunity, it is better to go for it rather than sitting on the fund, content with the existing business.
However, business expansion is not a sure-fire recipe for further success for any organization. The most vital aspect is the risk involved in the new action. If new branches are added and new people are recruited, if the company does not receive expected business and orders the new facilities and recruits will render useless. So it is important to know the business climate of the time, before proceeding with expansion plans. Another potentially disadvantageous aspect of business expansion is that the company may lose focus on the existing business. When all the energy is concentrated on business expansion plans, it is easier for the existing business to drift down unnoticed.
By: Ian Pennington
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