This page contains the entrepreneurship class 11 cbse book chapter/unit Concept of Market Expanding Markets notes where in the questions/answers/solutions for this chapter/unit 5.d are covered.
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Very Short Answers
Question Q.1.(i)
Q.1.(i) Define ‘Strategy’.
Answer Q.1.(i)
Strategy is a carefully designed plan of action to achieve a specific goal or objective.
Question Q.1.(ii)
Q.1.(ii) Give another name for “Market Expansion Grid”.
Answer Q.1.(ii)
Another name for the Market Expansion Grid is the Product Market Expansion Grid.
Short Answers
Question Q.2.(i)
Q.2.(i) Changing environment needs a strategic planning on part of business enterprises. What should there plan contain?
Answer Q.2.(i)
In a changing environment, business enterprises should plan sharper, focused, and competitive strategies to face new competition. They should also tone up their existing strengths and leverage first-mover advantage. Along with this, they must realize the need for growth so that they can survive and succeed in the changing market conditions.
Question Q.2.(ii)
Q.2.(ii) Enlist the options available to a business enterprise in this fast changing environment.
Answer Q.2.(ii)
In this fast changing environment, a business enterprise has only two options:
1.
Withdraw
2.
Fight
Instead of surrendering, it is better for the enterprise to plan stronger and more competitive strategies to survive in the market.
Question Q.2.(iii)
Q.2.(iii) State the categories into which a corporate strategies can be divided.
Answer Q.2.(iii)
Corporate strategies can be classified into four grand categories:
1.
Stability / Maintain strategies
2.
Expansion / Growth strategies
3.
Retrenchment / Divestment strategies
4.
Combination strategies
Long Answers
Question Q.3.(i)
Q.3.(i) When an entrepreneur selects to follow stability strategies?
Answer Q.3.(i)
An entrepreneur selects stability or maintain strategies when the firm wants to continue with the existing business and maintain its present position in the market. This strategy is suitable when the business is performing satisfactorily and the entrepreneur does not want major change in product, market, or operations. In such a case, the firm aims at steady performance, continuity, and survival rather than rapid expansion or retrenchment.
Question Q.3.(ii)
Q.3.(ii) When does a firm opts to pursue expansion strategy?
Answer Q.3.(ii)
A firm opts to pursue expansion strategy when it wants growth and enlargement in the same line of activity. Expansion means increase or enlargement and is chosen when the enterprise wants to grow, win an edge over competitors, and take advantage of new opportunities in a changing environment. It is useful when the entrepreneur wants to move ahead rather than remain limited to the present size of business.
Question Q.3.(iii)
Q.3.(iii) When does a firm opts to pursue penetration strategy?
Answer Q.3.(iii)
A firm opts to pursue penetration strategy when it wants to grow by selling more of its existing product in the existing market. This strategy is chosen when the entrepreneur feels that there is still scope to increase sales among present customers or to attract competitors’ customers. It is suitable when the market is not fully saturated and the firm wants growth without changing the product or entering a new market.
Question Q.3.(iv)
Q.3.(iv) Define diversification strategy with help of an example.
Answer Q.3.(iv)
Diversification strategy means adding new lines of business. These new lines may be related to the present business or may be completely unrelated. If the new business uses the firm’s existing technology, production facilities, or distribution channels, it is called related diversification. For example,Wipro, which was in the business of edible oils and soaps but later expanded into information technology also. This is an example of diversification.
Very Long Answer Questions
Question Q.4.(i)
Q.4.(i) ‘Desire to grow and expand comes naturally to an entrepreneur”. Do you agree? Give reasons for your answer.
Answer Q.4.(i)
Yes, I agree that the desire to grow and expand comes naturally to an entrepreneur. All businesses aspire to grow at one point or the other, and growth or expansion strategies are the most popular and commonly used strategies. A healthy firm normally has a natural desire for growth. Growth is essential for survival because if a firm does not grow while competitors are growing, it may lose its competitiveness. Growth is also needed to increase market share and achieve market leadership. The diversification helps in minimizing risks, while growth ensures fuller utilization of existing resources. Another important reason is that growth increases profits and also motivates the people working in the organisation by giving them new challenges and opportunities. Therefore, entrepreneurs do not like to remain stagnant. They naturally look for expansion so that the enterprise can survive, succeed, and remain ahead of competitors.
Question Q.4.(ii)
Q.4.(ii) What is intensive expansion. Explain with help of an example?
Answer Q.4.(ii)
Intensive expansion is a type of growth strategy in which the firm tries to grow within its present business area by making better use of existing products and markets or by developing new products and markets.
The market expansion grid, also called Ansoff’s Product Grid, is useful for identifying new intensive growth opportunities.
Under intensification, the main options are:
1.
Market penetration means selling more of the existing product in the existing market.
2.
Market development means entering new markets with existing products.
3.
Product development means developing or modifying the existing product to meet customer requirements.
The following are examples:
1.
adding new features like a fairness cream with sunscreen component,
2.
offering different quality levels like Surf Excel and Surf Ultra, and
3.
using alternative technologies like CDMA and GPRS mobiles.
Thus, intensive expansion helps a firm grow without changing its basic line of business.
Question Q.4.(iii)
Q.4.(iii) Differentiate between backward integration and forward integration.
Answer Q.4.(iii)
Basis
Backward Integration
Forward Integration
Meaning
It means taking a step back on the value-added chain towards raw materials.
It means taking a step forward on the value-added chain towards customers.
Main idea
The producer also becomes a raw material wholesaler or supplier. In essence, the firm becomes its own supplier.
The firm also becomes a finished goods wholesaler or marketer. In essence, the firm becomes its own buyer.
Direction
Moves upward / backward toward sourcing of inputs.
Moves downward / forward toward final market or customers.
Example
Nirma earlier purchased LAB, but later manufactured it itself.
A manufacturer starts marketing its products directly through its own showroom.
So, backward integration makes the firm its own supplier, while forward integration makes the firm closer to the final customer.
Project Based Questions
Question Q.5.(i)
Q.5.(i) List the different forms of Intensive Expansion. Explain the forms of Penetration strategies available to the firm.
Answer Q.5.(i)
Intensive expansion means that the enterprise increases the sales of its existing product by enlarging the existing market. The intensive expansion can take three important forms:
1.
Penetration Strategy
2.
Market Development Strategy
3.
Product Development Strategy
Among these,penetration strategy means growing by encouraging existing customers to buy more of the firm’s current product. The enterprise tries to increase the sale of current products in current markets.
The forms of penetration strategy available to the firm are:
1.
Encourage frequency of use: The firm motivates customers to use the product more often. For example, “brush twice a day” increases use of toothpaste.
2.
Increase usage per use: The customer is encouraged to use more quantity each time. For example, shampooing hair twice for better results.
3.
Attract new clientele: The enterprise converts non-users into users through sales promotion methods such as advertising, personal selling, discounts, coupons, and samples. Archie’s is given as an example, where greeting cards were promoted beyond festivals and birthdays into a general medium of communication.
4.
Attract competitors’ customers: The firm tries to win customers from competing brands. Hindustan Lever’s multi-brand strategy in soaps and detergents is given as an example.
Thus, intensive expansion helps a firm grow deeper in the same market.
Question Q.5.(ii)
Q.5.(ii) Discuss the forms available to an entrepreneur to go in for Integrative expansion along with examples.
Answer Q.5.(ii)
Integrative expansion is a form of expansion in which the enterprise grows by taking over activities that were earlier performed by outside agencies or by adding complementary activities at the same level. It is mainly divided into vertical expansion and horizontal integration.
1. Vertical Expansion
Vertical integration means that activities right from sourcing raw material to supplying finished goods, which were earlier done through external agencies, are now performed by the firm itself.
It has two forms:
(a)
Backward Integration
This means taking a step back towards the raw materials. In this case, the producer also becomes a raw material wholesaler or supplier. In simple words, the firm becomes its own supplier. For example Nirma, where the important raw material Linear Alkaline Benzyne (LAB), which was earlier purchased, started being manufactured by Nirma itself.
This means taking a step back towards the raw materials. In this case, the producer also becomes a raw material wholesaler or supplier. In simple words, the firm becomes its own supplier. For example Nirma, where the important raw material Linear Alkaline Benzyne (LAB), which was earlier purchased, started being manufactured by Nirma itself.
(b)
Forward Integration
This means taking a step forward towards the customers. In this case, the firm also becomes a finished goods wholesaler or seller. In simple words, the firm becomes its own buyer or marketer. For example, a manufacturer who was not marketing the product directly may start selling it through its own showroom.
This means taking a step forward towards the customers. In this case, the firm also becomes a finished goods wholesaler or seller. In simple words, the firm becomes its own buyer or marketer. For example, a manufacturer who was not marketing the product directly may start selling it through its own showroom.
2. Horizontal Integration
Horizontal integration occurs at the same level of the value-added chain but involves a different though complementary value-added chain. It may involve acquisition of one or more competitors at the same level of business. For example,Hindustan Lever Ltd. acquiring TOMCO, which strengthened its brand position and market share.
Thus, integrative expansion helps the entrepreneur strengthen control, reduce dependence, and increase market power.
Question Q.5.(iii)
Q.5.(iii) What is ‘Market Development Strategy’. How can the same be applied by the entrepreneur.
Answer Q.5.(iii)
Market Development Strategy means trying to increase sales of the existing product by entering new markets.
In other words, the product remains the same, but the entrepreneur looks for new customers, new areas, or new uses for it.
It is one of the forms of intensive expansion, where the firm grows by enlarging the market rather than changing the product itself.
An entrepreneur can apply market development strategy in several ways:
1.
First, the entrepreneur may enter new geographical areas, such as moving from one town to another city or state.
2.
Second, the entrepreneur may try to reach new customer segments for the same product.
3.
Third, the entrepreneur may identify new uses for an existing product and promote it accordingly.
The aim is to enlarge the present market base without changing the main product.
For example:
1.
If a local snack manufacturer is already successful in one city, the entrepreneur may start selling the same product in nearby towns, through distributors, or in supermarkets.
2.
In the same way, a clothing brand selling mainly to youth may begin targeting working women or family buyers with the same product line in a new market area.
Thus, market development strategy helps the entrepreneur grow by widening the reach of the existing product and capturing new markets.
Question Q.5.(iv)
Q.5.(iv) How can an entrepreneur enter a foreign market?
Answer Q.5.(iv)
One of the most important decisions is how to enter a foreign market. An entrepreneur can enter a foreign market through the following methods:
1.
Indirect Export: This is the easiest and most common way of going global. The company exports occasionally, either on its own initiative, through independent middlemen, or in response to unsolicited foreign orders. It involves the least change in product lines, workforce, investment, or mission.
2.
Direct Export: Here, the company handles its own exports. It involves more risk and investment, but also offers greater potential return. This can be done through a domestic export division, an overseas sales branch, or foreign-based agents/distributors.
3.
Licensing: The company allows a foreign firm to use its manufacturing process, trademark, patent, or trade secret in return for a fee or royalty. For example,Coca-Cola, which licenses bottlers around the world.
4.
Contract Manufacturing: The firm engages local manufacturers in the foreign country to produce the product. This reduces cost and risk. SEARS used this method in Mexico and Spain.
5.
Joint Ventures: This is a temporary or limited partnership between two or more firms. Profits and losses are shared in an agreed ratio.Godrej-GE is given as an example.
6.
Direct Investment: This is the highest form of global involvement, where the firm sets up or buys foreign-based manufacturing facilities. It involves large investment and risk.
Thus, an entrepreneur can enter a foreign market gradually or directly, depending on resources, risk-bearing capacity, and business goals.