Diversification in business

Diversification in business
See also
Ansoff strategy model Media house Generic competition Public relations in marketing Lateral diversification strategy Benchmarking Merger Product range Flanker brand

Diversification in business is the strategy of making the organization's efforts focused on extending its zone of action. This usually involves the extension of product range, but can also mean finding new suppliers, customers, implementation different from the conventional methods of production, etc.

Types of business diversification

• Concentric diversification - consists of minor alterations to existing products offered (with minor changes in manufacturing technology), enabling companies to offer customers who previously were not interested in products or services of to the company. They may be, for example, variants of the products (tools, musical instruments, everyday objects) for left-handed or disabled people.
• Horizontal diversification - is an action oriented towards existing customers and is it includes offering them a new product. Launching a new product in the application of this strategy may rely on the creation of new markets. An example is the manufacturer of introducing new flavour of drink.
• Conglomerate diversification - company extend its offer with products not related to the previous products, they are directed to an entirely new customers. Sometimes this strategy is related to the discontinuation of production of older products.

See also:

• BCG growth-share matrix
• Lateral diversification strategy

References

• Markowitz, H. M. (1968). Portfolio selection: efficient diversification of investments (Vol. 16). Yale university press.
• Rumelt, R. P. (1982). Diversification strategy and profitability. Strategic management journal, 3(4), 359-369.
• Ansoff, H. I. (1957). Strategies for diversification. Harvard business review, 35(5), 113-124.
• Imbs, J., & Wacziarg, R. (2003). Stages of diversification. American Economic Review, 63-86.