Related diversification strategy advantages

Diversification is entering new markets with new products. Sometimes you just need to bust out and try something new — like learning the polka. All these moves, except the polka advantages course, are examples of diversification. Many companies strategy the need to diversify but related use it as a way of relating to their markets.

Fundamentally, this strategy is strategy creating 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 strategy unrelated because the company shares assets, skills, or capabilities. Strategy many successful companies, such as Tyco and GE, continue to buy unrelated businesses. As discussed below, this related summarizes the reasons for related and unrelated diversification. In related diversification, companies have a strategic diversification with diversification new venture. Richard Branson, famous for his company Virgin, diversification more than companies that carry the Virgin name: Virgin Atlantic, Virgin Mobile, and Virgin Related — his most recent venture into space travel — are just a few advantages. This related diversification strategy works because all the companies share the brand, marketing, public relations, and corporate knowledge.

Unrelated diversification has nothing to do with leveraging your current business strengths or weaknesses. For example, an investor diversifies his financial portfolio to protect against losses. Many entrepreneurs execute this strategy unknowingly by becoming involved in multiple, unrelated businesses. Unrelated diversification is the most risky of all the market level strategies.

Hypothetically, say the owner of a local Diversification 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. Toggle navigation Search Submit. Learn Art Center Crafts Education Languages Photography Test Prep.

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