What are the risks and benefits of expanding the sale of a product to a new territory?You are working in a company that manufactures leather coats and belts, which it sells locally. The company is...

What are the risks and benefits of expanding the sale of a product to a new territory?

You are working in a company that manufactures leather coats and belts, which it sells locally. The company is making reasonable profits. The senior management of the company believes that the local market will soon be saturated and wants to find new avenues for expansion locally within a year and internationally within a five-year period.

Asked on by velvet70

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The major benefit of expanding into a new territory is the potential for greater sales.  By expanding the size of the territory in which you can sell, you make it possible to sell more of your (in this case) leather coats and belts.

The main risk is the risk of losing money.  You are probably going to need to expand your production to make enough product to sell in your expanded market.  It is possible that this will backfire.  You do not know for sure that there is going to be a good market for your products outside the local area.  If you expand production and cannot sell all of the new products you make, you will lose money.

The risk of expansion is losing money, the potential reward is more sales and therefore more revenue.

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