External Expansion Strategies

1008 Words5 Pages
External expansion strategies are now hitherto an integral part of the globalization and internationalization movement by enterprises. Foreign markets are now contributing to significant growth paths of businesses in terms of their bottom line. Innovation and best practices are now easier to capitalize or access through simply acquiring foreign operations of relevant companies to their business. There are two ways in which a company can growth namely organic and inorganic. Organic growth is a strategy where an enterprise develops by making use of its current business base and leverage. Under this growth factor an organization leverages on its current markets and business strength to grow. An example is perhaps when a national brewer decides…show more content…
To begin with when Davis group located a market area to operate in they noted a strong presence of a competitor in provision of textile services. This competitor had established a powerful presence in several geographical areas and countries in Europe. It becomes expedient for Davis to consider acquisition of Berendsen instead of trying to enter and break into this European market where strong competition already existed through Berendsen. Acquisition of Berendsen was a good opportunity as this company had a great network across Europe which Davis had to simply take over and begin to benefit from which in itself constituted literally of years of hard work and market penetration efforts coupled with market study and customer knowledge. Even though Berendsen was not performing very well financially still financial engineering would bring about a turnaround for Davis. The two companies were at similar productive thresholds and thus could benefit from a smart partnership and synergy provided by this acquisition. Below are factors are aspects of European Union markets which have particularly encouraged horizontal growth of the Davis Service…show more content…
This was due to the factor that the group would have to join the European Union markets consisting of a strong trading block of 27 countries in terms of possible market opportunities and business expansion. This business relationship would expose the Davis Service Group to a possible 500 million potential customers for them. Berendsen itself was operating in and had costumer base in several European companies such as Denmark, the Netherlands, Sweden, Norway, Austria, Poland and Germany. Most certainly this synergy would result in a powerful conglomerate with a massive amount of customers. Another aspect of the European Union markets which encouraged horizontal growth of the Davis group was the advantage of economies of scale. Due to the sheer size of the synergy the Davis group would easily achieve and benefit from economies of scale in the horizontal growth trajectory when business costs and expenses are spread among the two entities coming together. With respect to aspects of European Union markets which have particularly encouraged organic as opposed to inorganic growth the following
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