What Are the Benefits of Concentric Diversification? Accessed 14 September When expanding into different products or markets using existing capabilities, companies can create related diversification by using its capabilities and resources in other settings. It is when a business adds new, or unrelated, product lines or markets. Analyze diversification strategies based on their potential revenues and affect on your core business to achieve them. It was able to master logistics and deliver standardized hardware at prices and speeds no one else could match.
Feb 25, · The Coca-Cola Company recently announced that it had entered into a binding agreement to acquire initial minority equity shareholding in Chi Ltd. a Nigeria based leading dairy and juice company.
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The benefits to Starbucks are to grow sales, spread uneven demand and gain a competitive advantage. This strategy is also suitable for Starbucks because they have exhausted the ability to grow sales through the other means.
You are commenting using your WordPress. You are commenting using your Twitter account. You are commenting using your Facebook account. Notify me of new comments via email. Notify me of new posts via email. Diversification is just one of four growth strategies of the Ansoff Matrix below , which shows the four ways a firm can increase sales: Despite the risk, why do Starbucks want to diversify into food?
Posted in Diversification , Food and Drink. Posted by Josh on October 7, https: Leave a comment Leave a Reply Cancel reply Enter your comment here Fill in your details below or click an icon to log in: Email required Address never made public. Join other followers Search for: Create a free website or blog at WordPress. Post was not sent - check your email addresses! Sam Ashe-Edmunds has been writing and lecturing for decades. He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards.
He is an internationally traveled sport science writer and lecturer. Edmunds has a bachelor's degree in journalism. Skip to main content. Diversification Diversification means branching out into new business opportunities, not just expanding your existing business. Reasons for Diversification Before you begin planning a diversification strategy, write the reasons you are considering doing so.
Unrelated Strategies As you consider diversifying, decide if you want to stay in a related business or go into a completely different market. Brand Diversification In some cases, you can diversify by selling the same product, or a similar one, under a different name. Considerations When choosing diversification strategies, look at your current customer base to determine if you can sell them different items or if you can add new customers by selling them a similar product at a different price or under a different name.
References 2 Journal of Comprehensive Research: Corporate Strategy -- Diversification. One of the motives to diversify into an unrelated sector is to hedge your bets against the risks of economic or cyclical downturns that impact certain industries. This logic is similar to the diversification approach many investors take in picking investments or stocks. If one of your businesses struggles through a seasonal, year-long or multi-year dip, businesses in unrelated categories could still thrive.
This diversification helps you protect against major pitfalls of business downturns. An advantage of operating multiple business types within one corporate umbrella is that you can allocate company resources strategically to address the needs of each company.
Corporate employees can share responsibilities for roles such as human resources, buying, and information technology across the corporation. The corporation often gets discount buying advantages on supplies and resources that it can distribute across each business type. One of the most significant and typical drawbacks of branching out into unrelated business arenas is that you can spread your collective talents too thin.
Leaders in a company usually have expertise, strategic planning abilities, and leadership qualities specific to the given industry or business sector. The chances that a leadership group can provide consistent high-quality direction of drastically different companies are limited.
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For example, a phone company that adds or expands its wireless products and services by purchasing another wireless company is engaging in related diversification. With a related diversification strategy you have the advantage of understanding the business and of knowing what the industry opportunities and threats are;. Related diversification is one of the two variants of diversification strategy. When making related diversification, companies expand their operations beyond current markets and products, but are still operating within existing capabilities or within the existing value network. Related Diversification occurs when the company adds to or expands its existing line of production or markets. In these cases, the company starts manufacturing a new product or penetrates a new market related to its business activity.