- Diversification as a Viable Corporate Strategy
- Diversification as a Viable Corporate Strategy
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- Diversification as a Marketing Strategy
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Diversification as a Viable Corporate Strategy
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No notes for slide. Diversification strategies 1. Kuzmicki, Ph. When Should a Firm Diversify? Why Diversify? Industry Attractiveness Test—the industry presents good long- term profit opportunities 2. Cost of Entry Test—the cost of entering is not so high as to spoil the profit opportunities 3.
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Diversification as a Viable Corporate Strategy
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- Diversification as a Marketing Strategy | Small Business - ?
During the s, urbanization started increasing and a shift was seen from agriculture to the service sector. Agriculture, science and technology, industry and defence were targeted for modernization. In the Chinese computer hardware industry of 36 domestic vendors accounted for 82 per cent of the units of domestically manufactured PCs. Since, the SOEs were answerable to the government, all their revenues accrued directly to national government. The other kinds of players were original equipment manufacturers. They were partially government run or had significant ties with the government.
The software vendors were the next category. They were the principal suppliers to the software industry. The technically competent software vendors were few in number, often associated with ministries or universities or both. The overall PC market had grown at 32 per cent; and based machines had grown at per cent.
This shows that compatibility was improving to withstand the latest versions of the software. The CAGR Western software companies had not historically introduced localized versions of software in China. So, in order to capture the market Microsoft had to introduce the software in local versions. Localization is the concept of adaptation of software to specific locales. It is a complicated process, which involves various tasks. Microsoft in signed its first OEM agreement in Taiwan, home of over 3, PC systems and component manufacturers, before opening an office in Five years later Microsoft opened an office in China.
A small company can often create or enter a market area and do well with an innovative product. As the market matures, however, the necessity for a strong service organization becomes important. The smaller firm might then consider joining forces with a larger firm which has a service organization that can be adapted to the involved product. Typical example is the Bluetooth technology of Blackberry.
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Godrej is marketing the mosquito repellent Good knight and mango juice Jumpin, which are typical products of small entrepreneurs. One type of resources that is often easily exchanged is excess capacity. Related diversification can sometimes provide economies of scale. 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. However, the two firms together may be able to operate at an efficient level.
Diversification as a Marketing Strategy
Similarly, two firms when combined may be able to justify an expensive piece of automated production equipment. Even related diversification can be risky.
There are three major problems. 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. Second, potential synergy may exist but is never realized because of implementation problems. Third, possible violations of antitrust laws in the west and MRTP Monopolies and Restrictive Trade Practice law in India create an additional risk when an acquisition or merger is involved. Ironically, as the degree of relatedness and the synergy potential increase so does the possibility of an antitrust or MRTP problem.
Jet Airways and Sahara deal is a typical example. Jet Airways has extended its service to the mass market under Jet Lite. 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.