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Diversification is entering new markets with new products. Sometimes you diversificatoin need to bust out and try something new — like learning the polka. All these moves, except the polka of course, are examples dviersification diversification. Many companies appreciate the need to diversify but few use it as a way of relating to their markets. Fundamentally, this strategy is about diversificaation new products with new product life cycles and making the existing ones obsolete.
By doing so, firms launch new products that are developed not just for current customers but for new ones, too. To execute this strategy, you usually manage a merger, an acquisition, or a completely new business venture. Well-known, highly innovative companies include Intel, Google, DuPont, and all the pharmaceutical companies. Related diversification makes more sense than unrelated because the company shares assets, skills, or capabilities.
But many unrelated diversification strategy examples companies, such as Tyco and GE, continue to buy unrelated businesses. As discussed below, this figure summarizes the reasons for related and unrelated diversification. In related diversification, companies have a strategic fit with the new venture. This related diversification strategy works because all the companies share the brand, marketing, public relations, and corporate knowledge. Unrelated diversification has nothing to unrelateed with leveraging your current business strengths or weaknesses.
For example, an investor dtrategy his financial portfolio to protect against losses. Many entrepreneurs execute this strategy unknowingly by becoming unrelated diversification strategy examples in multiple, unrelated businesses. Unrelated diversification is the most risky of all the market level strategies. Hypothetically, say the owner of a local Diversjfication consulting company decided to take over a failing sandwich shop because he always wanted to be in the restaurant business.
Clearly, these two businesses are unrelated. But by accident, the business owner is executing a diversification strategy. Eight Tips on How to Choose a Consultant. Introduction to Prototyping for Business Analysis. How to Verify Systems Designed in Business Analysis. Managing Business Change For Dummies.
3 Simple Diversification Strategy Examples For The Stock Market
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Related diversification. In related diversification, companies have a strategic fit with the new venture. To make this strategy work, you capitalize on the strengths.
TYPES OF STRATEGIES: Diversification Strategies, Conglomerate Diversification Strategic Management Business Management.