Want to Expand Your Business? Let’s Understand the Various Types
Corporate Secretary Service Indonesia – Business expansion has a higher success rate because the rapid development of digital technology supports it. Business expansion is an activity to expand or enlarge the company’s network at that time. Business expansion is one of the many ways to grow a business and generate more profit. Often, this activity is used to control a higher market share. Various methods are used in business expansion, one of which is selling more products to consumers.
However, expansion cannot be done carelessly without a comprehensive plan and strategy. If the business is considered stable enough, the next task is how the business scale can shift to larger. Here are some reasons that answer the question of when you should expand;
- The business is in a growing business market position.
- The business has stability and positive cash flow.
- High customer demand
After you know when the right time and conditions are to expand, learn about the following types of business expansion;
Merger
For starters, you need to understand one of these types of expansion. As the name implies, a merger combines two or more companies into an integrated unit. Usually, in implementing this merger, the dominant company in the market will maintain its identity. Meanwhile, weak companies ‘ identities will be mixed. There are several types of mergers, including;
- Vertical Merger: The company is still in the same industry but has different operational levels.
- Horizontal Merger: A company in one industry buys a company at the same operational level.
- Conglomerate Merger: A merger with no industrial relationship with the acquired company. This type of merger aims to increase the company’s profit from various sources or business units.
An example of an expansion type of merger can be seen in the merger of Gojek with e-commerce applications such as Tokopedia, which merged into Goto.
Read Also: Managing the Closure of a Company, That Is Not Worthy of Continuing
Acquisition
In this type of expansion, a company purchases another company for a specific purpose, such as developing a business in a new sector. The purpose of the acquisition is to expand the company’s income or increase income from other sectors. In some companies, acquisitions are often used to maintain the availability of raw material supplies or guarantee that the market will absorb products. One example of expansion is Danone’s recognition of the Aqua drinking water company.
Hostile Takeover
As the name implies, a hostile takeover is an acquisition action carried out by “force”. Usually, this acquisition is intended to change control. This type of expansion is generally done by opening an offer for company shares to be controlled at a price above the capital market price.
Leverage Buyout
This type of expansion can be defined as a debt purchase. This method is quite rarely used because it is often considered wrong. A target company can sometimes be owned without significant initial capital. This type of business expansion is defined as taking over a company that is carried out using borrowed money (debt). Later, the acquiring company will sell the company to make a profit.
Every business entity or company involved in a business expansion will usually be bound by a contract or agreement whose contents are adjusted to the agreement and objectives of the expansion. Therefore, this agreement will vary according to the goals to be achieved by the parties involved.
Don’t worry about developing your business by setting up a company in Indonesia, because Portcorp is here as a solution for your business, also when you need Merger & Acquisition. Portcorp is your comprehensive corporate secretary service in Indonesia. With our presence, you can get a dedicated company secretary to support you to what you need. Our company secretaries will track deadlines and file paperwork so your business keeps running smoothly. Contact us now on +6221-5020-8090 for your business succeed in the future!
