Related Diversification Is a More Successful Strategy for Growth Among Firms Than Unrelated Diversification.
Abstract
This paper proves the hypothesis of marketing: - Related diversification is a more successful strategy for growth among firms than unrelated diversification.
It explains the concept of diversification, the rationale of diversification, types of diversification, diversification strategies, and dimensions of diversification. This paper analyses the given hypothesis using various examples and reaches a conclusion. Keywords Related, unrelated, diversifact, diversification, diversifame, diversifad, diversifriction
Hypothesis
Related diversification is a more successful strategy for growth among firms than unrelated diversification.
Diversification is a form of growth marketing strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry in which the business is already in. At the corporate level, it is generally entering a promising business outside of the scope of the existing business unit.
Diversification is part of the four main marketing strategies defined by the Product/Market Ansoff matrix: Ansoff pointed out that a diversification strategy stands apart from the other three strategies. The first three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line, whereas diversification usually requires a company to acquire new skills, new techniques and new facilities. Therefore, diversification is meant to be the riskiest of the four strategies to pursue for a firm.
Rationale of diversification
There are two dimensions of rationale for diversification.
(i) The first one relates to the nature of the strategic objective:
Diversification may be defensive or offensive.
• Defensive reasons may be spreading the risk of market contraction,
This paper proves the hypothesis of marketing: - Related diversification is a more successful strategy for growth among firms than unrelated diversification.
It explains the concept of diversification, the rationale of diversification, types of diversification, diversification strategies, and dimensions of diversification. This paper analyses the given hypothesis using various examples and reaches a conclusion. Keywords Related, unrelated, diversifact, diversification, diversifame, diversifad, diversifriction
Hypothesis
Related diversification is a more successful strategy for growth among firms than unrelated diversification.
Diversification is a form of growth marketing strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry in which the business is already in. At the corporate level, it is generally entering a promising business outside of the scope of the existing business unit.
Diversification is part of the four main marketing strategies defined by the Product/Market Ansoff matrix: Ansoff pointed out that a diversification strategy stands apart from the other three strategies. The first three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line, whereas diversification usually requires a company to acquire new skills, new techniques and new facilities. Therefore, diversification is meant to be the riskiest of the four strategies to pursue for a firm.
Rationale of diversification
There are two dimensions of rationale for diversification.
(i) The first one relates to the nature of the strategic objective:
Diversification may be defensive or offensive.
• Defensive reasons may be spreading the risk of market contraction,
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