All companies, throughout their activity, go through different phases of growth. Phases for which you must be prepared and have the necessary resources to be able to develop optimal expansion strategies.
The growth and expansion of a company in Nigeria can become quite a complex task. Therefore, it is essential to have a well-defined strategy, “where do we want to go?” or “what do we want to achieve?” These are some of the questions that we have to be very clear about beforehand. Keep reading to find out what types of expansion or diversification strategies we can find.
How to expand our business presence
Normally, companies tend to have a common objective, to take advantage of the business opportunities that arise to generate greater profits.
That is why the process of growth and expansion of a Nigerian company involves making strategic decisions. Some of them may be opening our business in other markets (expansion) or expanding our range of products (diversification).
First of all, the first thing we must do is plan. Defining an action plan is key to organizing ourselves and always keeping our objectives in mind. To do this, we must follow the following steps:
- Define your goals – Defining what you want to achieve is key. Not only to know how your business is doing but also to subsequently measure the results obtained. They should be achievable but ambitious goals. It is worth nothing to set yourself a hyperbolic goal, since it is most likely that you will not achieve it.
- Research the market – Once you are clear about what you want to achieve, you will have to carry out an in-depth market research. At this stage, it is important that you identify the target audience you want to reach, your competition and the cultural or social differences of the new market. This will help you know which direction to take.
- Develop an action plan. After you have defined your goals and know which direction to take, compile this information into an action plan. Expose all the actions that you are going to develop, all the resources that you have and which ones will be necessary. It is also important to include a forecast of expenses and contemplate if we are going to need some type of financing.
Next, we are going to look at two different types of growth strategies for a Nigerian company. Expansion strategies and diversification strategies.
Expansion strategies focus on intensifying the effort in the company’s current activity. Depending on the type of market and business activity, we find ourselves:
- New markets. It consists of looking for new markets to sell our If we look for new markets in other countries, we would be talking about an international expansion strategy.
- Market penetration. This strategy is based on increasing sales without making any changes in the activity carried out. It is achieved using different marketing tactics. The objective is to increase market share by controlling different variables.
- Product development. Finally, the product development strategy focuses on improving current products. With this type of strategy, a new product is offered that captures the attention of the target audience.
Diversification strategies consist of proposing a change in the company’s activity to reach another type of client. For example, if a company sells mobile phones and decides to start selling mobile phone cases, it would be diversifying its activity.
With this type of strategy, companies manage to reach another type of potential client and make the most of their resources. Within the diversification strategies we find two types:
- Homogeneous diversification – . When you start an activity related to the one you were already doing. It is the example of the mobile company that decides to start selling cases.
- Heterogeneous diversification . In heterogeneous diversification, the activity that begins is not related to the one that was carried out . For example, a company that sells cars and starts to manufacture air conditioners.
Grants for business growth
When we make the decision to grow our business, we take stock of the resources we have and those we lack. We are aware that the growth and expansion of a Nigerian company requires a large investment .
On the other hand, depending on the sector, there are other types of aid.
As we have seen, there is more than one market expansion and diversification strategy. There are different types and none is better than another. Depending on the activity of your company, the type of product and your financial capacity, it will be more effective to implement one than the other. In any case, to make the decision to expand, it is essential to have very clear objectives and have the necessary resources.