Concentric diversification with example
Companies may enter into a contract or may form a wholly separate but related business known as a joint venture. However, there are a few good examples of successful diversification: Virgin Group moved from music production to travel and mobile phones Walt Disney moved from producing animated movies to theme parks and vacation properties Canon diversified from a camera-making company into producing an entirely new range of office equipment.
He has written primarily for the EHow brand of Demand Studios as well as business strategy sites such as Digital Authority. Another interpretation[ edit ] Horizontal integration occurs when a firm enters a new business either related or unrelated at the same stage of production as its current operations.
The technical knowledge for new venture comes from its current field of skilled employees. Photo Credits.
One of the most effective ways a business can grow and expand is by implementing concentric diversification, which focuses on adding products and services that are related to the main product or service that you offer. In order to measure the chances of success, different tests can be done: [5] The attractiveness test: the industry that has been chosen has to be either attractive or capable of being made attractive.
Concentric diversification ppt
Definition Companies may diversify to spread risk, maximize shareholder value and use up cash on a cash-laden balance sheet. Taps Into Existing Infrastructure One of the important benefits of concentric integration is that it allows you to utilize your existing competencies and abilities to launch your new product or service. However, this strategy offers increasing flexibility in reaching new economic markets. However, the owners saw an opportunity to gain entry into the children's market by manufacturing hardware. Therefore, the company puts itself in a great uncertainty. The manufacturer benefits because it operates on just-in-time principles and now part of its raw materials are now on site. In order to measure the chances of success, different tests can be done: [5] The attractiveness test: the industry that has been chosen has to be either attractive or capable of being made attractive.By combining a number of regional breweries into a national network, beer producers have been able to produce and sell more beer than had independent regional breweries.