Diversification
Diversification may be defined as a strategic approach adopting different forms . It can be classified as mentioned below:
1. Horizontal Diversification:
Innovating or developing new products or offering new services that can meet to the company´s current customer groups. In this category, the company relies on sales and technological associations to the existing product segments. For example a dairy, producing cheese and Paneer adds a new type of products its products diversification.
2. Vertical Diversification:
It occurs when the company start producing its raw materials or distribution of its final product. For example, if you have a company of real-estate and you start selling paints and other building raw materials …show more content…
Strategically, the concentric diversification can be a financially efficient move, since the business may benefit from some synergies in this diversification model. It may enforce some investments related to debottlenecking or upgrading the existing processes or systems. This type of diversification is being used by small producers of consumer goods like a bakery starts producing pastries, Cake, cookies and dough products.
4. Conglomerate Diversification or Heterogeneous Diversification:
Conglomerate diversification is moving to new products or services that have no technological or commercial co-relation with existing products, equipment, distribution channels, but which may plea to new groups of customers. The main purpose behind this type of diversification is the high return on investments in the new industry setup. Moreover, the decision to go for this type of diversification can lead to additional opportunities related to further developing the main company business admittance to new technologies, opportunities for strategic partnerships.
5. Corporate
Diversification may be defined as a strategic approach adopting different forms . It can be classified as mentioned below:
1. Horizontal Diversification:
Innovating or developing new products or offering new services that can meet to the company´s current customer groups. In this category, the company relies on sales and technological associations to the existing product segments. For example a dairy, producing cheese and Paneer adds a new type of products its products diversification.
2. Vertical Diversification:
It occurs when the company start producing its raw materials or distribution of its final product. For example, if you have a company of real-estate and you start selling paints and other building raw materials …show more content…
Strategically, the concentric diversification can be a financially efficient move, since the business may benefit from some synergies in this diversification model. It may enforce some investments related to debottlenecking or upgrading the existing processes or systems. This type of diversification is being used by small producers of consumer goods like a bakery starts producing pastries, Cake, cookies and dough products.
4. Conglomerate Diversification or Heterogeneous Diversification:
Conglomerate diversification is moving to new products or services that have no technological or commercial co-relation with existing products, equipment, distribution channels, but which may plea to new groups of customers. The main purpose behind this type of diversification is the high return on investments in the new industry setup. Moreover, the decision to go for this type of diversification can lead to additional opportunities related to further developing the main company business admittance to new technologies, opportunities for strategic partnerships.
5. Corporate