What is an internal expansion?

Internal expansion is a process of business growth using resources within business and does not include the use of any type of external activities to obtain new customers. The growth of this type may occur by processing customers' recommendations using internal employees or using corporate sources to manage internal financing of new locations or expansion of existing facilities. The strategies used as part of the internal expansion initiative differ from strategies used as part of an external expansion that relies on the use of strategies and resources outside business. Most companies work with limited use of internal expansion, while the company owners and managers often find that a mixture of internal and external expansion strategies can often be in the best interest of the company.

One way to understand how internal expansion works is to consider the need for an enterprise to increase its profits. Internal strategies would include finding ways to reduce the operationalEXPENSION without minimizing quality or support for customers, which would allow the company to maintain more profit from each unit sold. In the same line, the company can even expand its customer base through recommendations provided by current customers. Real methods will vary depending on how the society is structured, but each strategy of internal expansion would rely on the use of resources that are already internally, and consider the shares of the company to complete the tasks.

The same general approach would apply if the internal expansion project had to do with the opening of a new company. Rather than obtaining financing from a bank or other type of creditor, the internal approach would focus on internal financing possibilities, such as the project financing using the assets contained in the Company's construction Fund. Overtime, the flow of income generated by this new locationwould be used to complete the construction fund, which allows the company to reuse this internal asset in the future.

The concept of internal expansion involves the use of what is already internally without trying to switch outside these sources to achieve certain types of goals. This is different from an external expansion that would include the use of external marketing companies, creating an external seller's sales force, or using various forms of advertising to obtain customers. Similarly, the use of external expansion methods for construction projects would also prevent, which means that the company would not look for external financing from banks, investors or other creditors for the management of these projects.