YOGYAKARTA - Expansion is a term that is often encountered in the business and economic world. Although it is not a foreign term, there are still some people who do not understand what expansion is. Want to know what types of expansion are?
According to the Big Indonesian Dictionary (KBBI), expansion is an expansion of the circulation of money into circulation. This is related to the economic world.
As for the Cambridge Dictionary, expansion means an effort to increase the dimension of a certain number or interest.
Understanding Expansion According To Experts
Reporting from the Introductory Business by Sattar, S.E., M.S., the following is an interpretation of expansion for several experts.
Expansion is something that is taken by the company to enlarge the industry from a smaller size to a bigger one because the increasing demand for its goods or services is increasing.
Expansion is an expansion of capital, both the expansion of working capital alone or the working capital that is used continuously within the company.
Expansion is the expansion of businesses that can be done by increasing the capacity of factories to increase the production unit to increase the new division and also mixing existing businesses (consolidation) or buying existing companies (acquisition).
So it can be concluded that expansion is an activity that is carried out to make the matter in question increase or be bigger. Not only that, expansion can also be referred to as an increase in economic activity and business growth (expansion).
The expansion consists of sharing the type or form that is tailored to the characteristics of the company. Here are the types of expansion.
1. Business Expansion
Business expansion is an expansion that is carried out without making changes to the capital structure. In this expansion, the industry does not add production equipment but only increases working capital by using the production capacity in the company.
For example, entrepreneurs increase their production capacity or distribution to increase company income. Usually, an entrepreneur who carries out an expansion is to increase demand for goods or services provided so that they are required to expand their production capacity.
There are several various business expansions that the company often does. Among other things, namely the following.
Merger (merging): expansion activities that merge 2 or more companies become one large company. Mergers are carried out to expand their business.
Acquisition (acquirement): buying or taking over most or all shares of the company to gain control over the company.
Leveraged buyout (debt purchase): purchase of a certain company with debt loan procedure.
Hostile takeover (force takeover): a forced acquisition of a company by opening up a share price offer to be owned in the capital market at a price that exceeds market prices.
Joint venture (founding a joint venture): the merger of 2 companies that agreed to build new businesses in order to achieve greater economic power regardless of capital background and location in each country concerned.
2. Financial Expansion
Financial expansion is the activity of buying durable production tools, modernizing old production tools, establishing new factories to take over other companies, merging with other companies, and so on.
This type of expansion causes changes in its capital structure. At this level of extension, capital needs soar so that this form is often called soaring expansion.
3. Credit expansion
Credit expansion is an activity to increase the amount of credit. Credit itself is the provision of money or bills based on a loan agreement between banks and other parties that requires borrowers to carry out the amount of interest as a reward.
4. Market Expansion
Market expansion is an activity that the company is undergoing with the aim of expanding the new market with various products that the company already has.
The purpose of the company is to expand, namely to reach the market at a new location.
In addition, we also provide related articles, 'What is Acquisition' and its type and purpose.
So after knowing the types of expansion, see other interesting news on VOI.ID, it's time to revolutionize news!
The English, Chinese, Japanese, Arabic, and French versions are automatically generated by the AI. So there may still be inaccuracies in translating, please always see Indonesian as our main language. (system supported by DigitalSiber.id)
