When is a "diversification growth strategy" appropriate?
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Answer Posted / mangesh
diversification means selling new products or services in
new markets.It can be done in four ways:
1. Horizontal diversification:this occurs when Co. acquires
or develops new products that may appeal to existing
customer groups even though the new products may be
technologically unrelated to existing product lines.
2. Vertical diversification:The Co. moves into business of
suppliers or that of its customers. This is normally done to
reduce threat from the suppliers and customers.The customers
means the channel members.
3. Concentric diversification:results in new
products/services that have technological and/or mktg
synergies with existing product lines.
4.Conglomerate diversification:occurs when there is neither
technological or mktg synergies with existing product lines
and involves reaching new customer groups. This is done by
large companies to balance cyclical portfolio with
non-cyclical one.
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