In the majority of cases it does not require big investments and owners feel more secure because they know the opportunities and threats in the field of their main business activities. Also write down your choices and decisions to plan the actions necessary to move forward use samples to provide you with a model for your own action plan. Management may expect great economic value growth, profitability or first and foremost great coherence with their current activities exploitation of know-how, more efficient use of available resources and capacities. It also seems to increase its market share to launch a new product that helps the particular company to earn profit. Review the criteria required to build a Value Chain Analysis for your business. Review your current suppliers, sales reps and distribution partners to determine if you can use them to sell different products, reducing your start-up costs. Therefore, a firm should choose this option only when the current product or current market orientation does not offer further opportunities for growth.
Analyze diversification strategies based on their potential revenues and affect on your core business to achieve them. Diversification For example, if you have a dine-in restaurant in one town, opening a second restaurant in the next town is expansion, not diversification.
Reasons for Diversification
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Small Enterprise Strategic Development Training
Start studying Corporate Strategy - Related and Unrelated Diversification. Learn vocabulary, terms, and more with flashcards, games, and other study tools. A process that takes place when a business expands its activities into product lines that are similar to those it currently offers. For example, a manufacturer of computers might begin making calculators as a form of related diversification of its existing business. With a related diversification strategy you have the advantage of understanding the business and of knowing what the industry opportunities and threats are; yet a number of related acquisitions fail to provide the benefits or returns originally predicted.