Please read question and response and then form your own opinion on whether you agree or disagree with the response and why....must be at least two pragraphs long.
Identify a company that has applied a diversification strategy. Was it related (concentric) or unrelated (conglomerate) diversification? Discuss what you think could have been their reasons for doing this strategy.
A form of business development that many companies at least try at one point or another is the diversification strategy. Small businesses can use this strategy to set themselves ahead of their competition by offering more in order to gain a bigger market. This strategy offers opportunities for a business to grow by increasing sales from existing customers as well as gaining new customers who you now appeal to. This strategy may work in one of two ways. 1. A business can offer an entirely new product or 2. They can modify an existing product.
Coffee shops modify their products so they are able to appeal to nearly any person by offering a range of coffee related beverages. These include regular coffee, espresso, and decaf, iced and frozen drinks. Of these different ways to prepare a coffee beverage, the industry is able to appeal to multiple types of consumers.
Another way in which coffee shops use this strategy is by adding other products to their menu. Tea is often common in a coffee shop, for the market of people who do not prefer any of the above listed coffee beverages. Also, adding small breakfast, snack, and pastry items to the menu brings in even more customers as well as encourages existing customers to make a bigger purchase.
Regardless of the route of this diversification strategy a company takes, they must be aware of the risks of each. This strategy is one of higher risk as is it easy to see the opportunity, but that opportunity may not be the right priority for the company at that given time. Perhaps the time for a company to pursue this strategy would be best when the market is growing and there is not another company who is meeting that specific demand. Otherwise, you would be entering into more competition than the company may be ready to take on.
Before deciding to implement this strategy, thorough research should be conducted to that the chances for success of such opportunity are able to be measured in order to determine if this strategy is the best route for the company.