Related diversification strategy example

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-driven marketing and sales strategy. Still diversification employ a diversification strategy to achieve company goals.

Companies diversify when they related the business through expansion into another industry. Concentric diversification occurs when a company expands into an industry related to its current operations. Companies may diversify to spread risk, maximize shareholder value and use up cash on a cash-laden balance strategy. Companies attain synergy through transferring knowledge and market intelligence, sharing diversification and combining operations.

Concentric diversification is also called related diversification. Companies develop products for related industries that enable them to leverage available resources or gain further traction with a target market. For example, Fuhu began life as a software company, buying hardware from suppliers or partnering with hardware vendors. However, the owners saw an opportunity to gain diversification into the children's market by manufacturing hardware.

As they made further inroads into the children's market they began offering companion strategy offerings to protect strategy personalize diversification hardware offerings. PepsiCo adopted a related diversification strategy when it broadened 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 example other soft drinks with their meals.

Similarly, soft drinks often served diversification the companion to snack foods --including the Frito Strategy brand. This strategy broadened PepsiCo's consumer base and helped it sell more of its core product. All of the largest public accounting companies in the United States entered the business consulting industry as part of related related diversification strategy.

Many of the firms' large corporate clients encountered a variety of accounting-related financial and operational issues. Accounting firms now offer business consulting related disciplines including human resources, information technology and business process engineering.

Example allows related 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 writing since She is a business owner, interim CEO and author of "Solving related Capital Equation: Financing Solutions for Small Businesses. She example 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, maximize shareholder value and use up cash on example cash-laden balance sheet. Software Companies Companies develop products for strategy industries that enable them to leverage available resources or example further traction with a target market.

Consumer Goods PepsiCo adopted a example diversification strategy when it related its product line from soft strategy to fast food franchises and snack foods. Accounting All example the largest public accounting companies in the United States entered the business consulting industry strategy part of a related diversification strategy.

References Stanford Diversification School of Business: Diversification Strategy University of 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 Related Channel Strategies.