Expansion strategy refers to redefining the business by adding the scope of business substantially through major reformulation of objectives and goals, involving new investments, introduction of new products, new technology and new markets, innovative decisions and so on.
Its characteristics are as follow
a) Expansion strategy is the opposite of stability strategy. While in stability strategy rewards are limited, in expansion strategy they are very high. In the matter of risks, too, the two are the opposites of each other.
b) Expansion strategy is the true growth strategy. A firm with a big growth ambition can meet its objective only through the expansion strategy.
c) Expansion strategy involves a redefinition of the business of the corporation.
d) The process of renewal of the firm through fresh investments and new businesses/products/markets is facilitated only by expansion strategy.
e) Expansion strategy is a highly versatile strategy; it offers several permutations and combinations for growth. A firm opting for the expansion strategy can generate many alternatives within the strategy by altering its propositions regarding products, markets and functions and pick the one that suits it most.
f) Expansion strategy holds within its fold two major strategy routes: Intensification Diversification
g) Both of them are growth strategies; the difference lies in the way in which the firm actually pursues the growth.