Unrelated diversification is a form of diversification when the business adds new or unrelated product lines and penetrates new markets for example, if the shoe producer enters the business of. For example, a company involved in the reconstruction of houses starts selling construction materials and paints concentric diversification in this form of a diversification strategy, the entity introduces new products with an aim to fully utilize the potential of the prevailing technologies and marketing system for example, a bakery making. Diversification is a method of portfolio management whereby an investor reduces the volatility (and thus risk) of his or her portfolio by holding a variety of different investments that have low. In fact, there are two common types of diversification that business owners can pursue: conglomerate diversification and concentric diversification business owners must assess the benefits and drawbacks of each type of diversification, before they decide which one to pursue. Diversification is a means of managing risk, and it is accomplished by mixing a variety of financial instruments within a single portfolio the goal of diversification is to minimize the impact.
Adding new, but related, products or services is widely called concentric diversification an example of this strategy is at&t recently spending $120 billion. Definition of concentric diversification: a type of diversification in which a company acquires or develops new products or services (closely related to its core business or technology) to. Get help on 【 diversification: marketing and growth strategy essay 】 on graduateway huge assortment of free essays & assignments the best writers concentric diversification is a kind of diversification when a company adds related products or markets a good example when conglomerate diversification strategy was applied is the case. One example of horizontal diversification can be seen with a local retailer who has an established reputation for selling quality pieces of jewelry as a means of increasing business, the retailer may decide to carry a line of scents in the shop.
The simplest example of diversification is provided by the proverb don't put all your eggs in one basketdropping the basket will break all the eggs placing each. One example of concentric diversification is sharing resources or facilities companies do this to achieve economies of scale and reduce costs for example, a metals distributor who needs a larger warehouse may contract with a manufacturing company that has a processing facility with extra space. Concentric diversification occurs when a firm adds related products or markets the goal of such diversification is to achieve strategic fit strategic fit allows an organization to achieve synergy. 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.
With concentric diversification, it is not unusual for newer products to have some relationship to the existing product line for example, a company that has established a steady clientele for its paper plates may choose to add other product lines that can be used along with the plates. Concentric diversification involves adding similar products or services to the existing business for example, when a computer company that primarily produces computers starts manufacturing laptops, it is pursuing a concentric diversification strategy. Diversification as a viable corporate strategy the best example of this type of diversification is launching mobile payment systems by mobile telephony companies wherein they tap newer market segments with newer product and service lines concentric diversification. Concentric diversification strategy: the introduction of new but related products in the new markets is considered as concentric diversification strategy for example, the at&t company in america is involved in the application of concentric diversification strategy by adding cable lines for fast internet services across the country the.
Concentric diversification is a strategy that focuses on the characteristics that have given the company its competitive advantage companies pursing concentric diversification attempt to secure a strategic fit in a new industry where they have significant knowledge or development capabilities. There are three types of diversification: concentric, horizontal, and conglomerate concentric diversification[edit source | editbeta] this means that there is a technological similarity between the industries, which means that the firm is able to leverage its technical know-how to gain some advantage. How it works (example): many well-run conglomerates like berkshire hathaway and general electric are much like funds in that they offer diversification and are less sensitive to general business cycles than more focused companies popular now 1 what is a small-cap stock 2.
Concentric diversification definition concentric diversification is a type of business strategy where a company acquires or creates new products or services to reach more consumers. A concentric diversification strategy lets a firm to add similar products to an already established business for example, when a computer company producing personal computers using towers starts to produce laptops, it uses concentric strategies. Examples of conglomerate diversification • example of indian company which have adopted apart of growth and expansion through conglomerate diversification the classic examples is of itc, a cigarette company diversifying into the hotel industry. Type of diversification whereby a firm enters (through acquisition or merger) an entirely different market that has little or no synergy with its core business or technology.