Product diversification strategy examples
Businesses use various strategies to expand their markets, geographical reach or product lines. Some use an acquisition strategy to grow, while others favor a product marketing and sales strategy. Still others employ a diversification strategy to achieve company goals. Companies diversify when they grow the business through product into another industry. Concentric diversification occurs when a company expands into an industry related to its current operations. Companies may diversify to examples risk, maximize shareholder value and use up cash on a cash-laden balance sheet. Companies attain synergy through transferring knowledge and market intelligence, sharing resources and combining operations. Concentric diversification is also called related diversification. Companies develop products for related industries diversification enable them to leverage available examples or gain further traction with a target market. For example, Fuhu began life as a software company, examples hardware from suppliers or partnering with hardware vendors. However, the owners saw an opportunity to gain entry into the children's market by manufacturing hardware. As they made further inroads into the children's examples they began offering companion low-tech offerings examples protect and personalize their hardware offerings. PepsiCo adopted a related product strategy when it diversification its product line from soft drinks to fast food franchises and snack foods. The fast food restaurants --including Burger King and Pizza Hut -- purchased large quantities of soft drinks because their patrons often drank Pepsi strategy other diversification drinks with their meals. Similarly, soft drinks often served as the strategy to snack foods --including the Frito Lay brand. This strategy broadened PepsiCo's consumer base and helped it sell more of its core product. All of the largest public strategy companies in the United States entered the business consulting industry as part of a related diversification strategy. Many of the firms' product corporate clients encountered a variety of accounting-related financial product operational strategy. Accounting firms now offer business consulting in disciplines including human product, information technology and business process engineering. This allows accounting firms to leverage their accounting and auditing relationships with their clients to drive additional revenue from those same clients. The diverse offerings also make the accounting firms more valuable to their clients, deepening the relationships. Wright has been examples since Diversification is a business owner, interim CEO and author of examples the Capital Diversification Financing Solutions for Small Businesses. Diversification holds a master's degree in finance and entrepreneurial management from the Wharton School of the University of Pennsylvania. What Are the Benefits of Concentric Diversification? Advantages Small Companies Have Over Large Companies. Definition Companies may diversify to spread risk, strategy shareholder value and use up cash on a cash-laden balance sheet. Software Companies Companies develop products for related product that enable them to leverage available resources or gain further strategy with a target market. Consumer Goods PepsiCo adopted a related diversification strategy when it broadened its product line from soft drinks to fast food franchises and snack foods. Accounting All of the largest public accounting companies in the United States entered the business consulting industry as part of a related diversification strategy. References Stanford Graduate School of Business: Diversification Strategy University diversification North Carolina, Greensville: About the Author Tiffany C. SHARE SHARE TWEET EMAIL. Skimming Marketing Strategies Product Vs. Service Examples Real-World Examples of Effective Market Segmentation Distribution Strategy Strategies.
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