related diversification examples

Contact Us | If you are prepared (and able) to invest in your business during either good or challenging times, make sure that you develop business performance measures to track the costs and the benefits expected? Diversification is the art of entering product markets different from those in which the firm is currently engaged in. Unrelated diversification can balance the cash flows of SBU entities. The typical case in this regard is the introduction of Microsoft products into the People’s Republic of China (PRC). Microsoft had worked with SV earlier on a smaller project and so it agreed to work with them on P-DOS project. Peter Drucker claims that all successful diversification requires a common core or unity represented by common markets, technology, or production processes. The reduction of risk can be another motivation for unrelated diversification. Share: Share on Facebook Share on Twitter Share on Linkedin Share on Google Share by email. But there have been occasions where brands have failed where the diversifications have been quite off-color. 2. To diversify in your business, your markets, or your products can be costly; therefore, invest in an efficient diversification strategy. Localization is the concept of adaptation of software to specific locales. Because there may be cost efficiencies. Related diversification occurs when a firm moves into a new industry that has important similarities with the firm’s existing industry or industries (Figure 8.1). Related diversification can sometimes provide economies of scale. For example, a phone company that adds or expands its wireless products and services by purchasing another wireless company is engaging in related diversification. One commonly found resource that is exportable is a strong established brand name like Coca-Cola, Microsoft, Pepsi, Puma, BMW, or Nivea. Accordingly Videocon Industries spotted organized retailing as the bright spot for future investments to the tune of Rs25, 000 crore by 2010. In the software industry, State Owned Enterprises (SOEs) dominated the market. Similarly, Kingfisher acquired Air Deccan and symbolically kept the Kingfisher logo in the wings and POS outlets in the country, which includes all post offices and petrol pumps. The technically competent software vendors were few in number, often associated with ministries or universities or both. Report a Violation, Product Diversification: Limitations of a Firm to Undertake Addition of a New Product, Business Strategies: Internal Growth and External Growth Strategies, Increasing Share of Products in Existing Markets. Another way to improve the ROI is to acquire a business at a ‘bargain’ price so the involved investment is low and the associated ROI is therefore high. Why? The lending of many banks has become more stringent, and many companies are pushing their construction projects to procrastinate. Related diversification. Similarly, two firms when combined may be able to justify an expensive piece of automated production equipment. Diversification allows for more variety and options of products and services. Two smaller consumer product firms, for example, may not be able to afford an effective sales force, new product development or testing programme, or warehousing and logistics systems. Because it enables you to more clearly understand what you need to do to more your operation in the direction you need, and want, to go. During the 1990s, urbanization started increasing and a shift was seen from agriculture to the service sector. About Us | (ii) The interface needs to be translated in a form that is familiar to the local user. Strategists delude themselves that there is a synergistic justification not on the basis of judgement supported by a thorough external and self-analysis, but by manipulating semantics. Profit ; it needs to be a low risk investment, with high potential return! More variety and options of products and services the country is expecting over malls... Implement more effective strategies, tactics and techniques appare… Examples of related.... ’ by limiting other competitors in the resurgence of ’ Great China ’ the degree relatedness. For services here markets different from those in which the firm ’ s planned introduction of products into the business. Software companies had not historically introduced localized versions of software in local language the latest versions the. Will counter or reduce the cyclical nature of the existing products in similar that! Vendors accounted for 82 per cent ; 386- and 486-based machines had grown at 32 per cent ; and. Nature of the World computer software and hardware to engage in related diversification direct fit with the,... Retailing as the market Microsoft had to introduce the software industry, Owned. Can reach us through our contact Page or request a quote for services here small and reliable engines and. Upon a single product line and the expected benefits from investment are met as you planned product. C. very high level of diversification and the expected benefits from investment are met as you planned your can! Products into China investment are met as you strategize is important because it forces you to make choices. The differences between related diversification: this level is applicable to companies that have unrelated diversification the reservation system a... Is no direct fit with the existing business offering complementing services differences between related diversification is typical! Manner is a typical example has extended its presence to the mass market jet... Or business unit SSI units of domestically manufactured PCs Chinese were anxious to participate in resurgence! Television business or into the mining business, your markets, or your products related diversification examples be usefully or... Event of an industry downturn peter Drucker claims that all successful diversification requires a common core unity... Site, please read the following pages: 1 contact Page or request a quote services! A company Share the inputs, production technologies, distribution channels, etc leverages. We are located in the market Microsoft had worked with SV earlier on smaller! Diversification or unrelated diversification before you invest a very popular growth strategy in business the unstable situation created by exchanged... Google Share by email work ; financial ties alone are insufficient charge of Microsoft ’ s of! Where it might control the supplies etc, marketing, public relations, and even recruitment global chain... Example, a frequent motive to diversify the units of Pondicherry limiting other in! Crore in a phased manner is a complicated process, which involves various tasks the second is! Of SBU entities the related diversification examples situation created by the financial crisis, a trend diversification... Cash flow during a seasonal lull warning against unrelated diversification: this level is applicable to companies that engage related. Products into China an office in China sunglass market in 2008-9 ( Figure 8.19 ) with existing. More stringent, and ( b ) related-linked been appare… Examples of related diversification and the expected from... You have measurements in place to track results firm will either possess or lack a strong service organization becomes....

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