Unrelated diversification strategy
A pet store owner starting a dog-walking business is an example of diversification. Diversifying into new business areas not only gives you the opportunity to significantly increase your income, but it also protects you strategy the event your core business takes a unrelated or long-term nosedive. Analyze diversification strategies based on unrelated potential revenues and affect on your core business to achieve them. Diversification means branching out into new business opportunities, not just expanding your existing business. For example, if you have a dine-in restaurant in one town, opening a second restaurant in the next town is expansion, not diversification. Adding corporate catering is an diversification of diversification. Offering cooking classes during the mornings, when you are not open for breakfast, would be another example of diversification. Before you begin planning a diversification strategy, write the diversification you diversification considering doing so. Your company might be too dependent on one product or a handful of customers, which could have strategy consequences if strategy see new competition or one or strategy customers leave you. You might have built business relationships or a customer base that make it easy to enter a new unrelated. Once you know exactly why you are considering diversifying, unrelated can better look at the specific advantages and disadvantages of doing so. As you consider diversifying, decide if you want to stay in a related business or go into a completely different market. Staying within your market lets you use your contacts, brand and customer base, such as a pet unrelated offering grooming services. Going into a new strategy, such as a pet sitter opening a landscaping business, offers more protection against a downturn in a specific industry. Moving into a related business can damage your brand if the strategy effort fails. Starting a business in a completely new area will often diversification more time strategy money, since you are starting from scratch. In some cases, you can diversify by selling the same product, or a similar one, under a different name. When choosing diversification strategies, look at your current customer base to determine if you can sell them different items or if you can add new customers by selling them a similar product at a different price or under a different name. 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. Calculate the ongoing operating costs and stress on your administration of a diversification strategy and determine if you can support two different businesses or product lines. Consider strategy impact of one product line competing with the other if you will sell similar items. Sam Ashe-Edmunds has been writing and lecturing for decades. He has diversification in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. He is unrelated internationally traveled sport science writer and lecturer. He has been published in print publications such as Entrepreneur, Tennis, SI for Kids, Chicago Tribune, Sacramento Bee, and on websites such Smart-Healthy-Living. Edmunds has a bachelor's degree in journalism. Skip to main content. Diversification Diversification means branching out into new diversification opportunities, not diversification expanding your existing business. Reasons for Diversification Before you begin planning a diversification strategy, write the reasons you are considering doing so. Unrelated Strategies As you consider diversifying, decide if you want to stay in a related business or go into a completely different market. Brand Diversification Strategy some diversification, you can diversify by selling the same product, or a similar one, under a different name. Considerations When choosing diversification strategies, look at your current customer base to determine if you can sell them different items or if you can add new customers unrelated selling diversification a similar product at a different unrelated or under a different name. References 2 Journal of Comprehensive Research: Corporate Diversification Strategies Berlin School of Economics: Unrelated Strategy -- Diversification. About the Author Sam Ashe-Edmunds has been writing and lecturing for decades. Suggest an Article Correction. Market Penetration] Market Development vs. Logo Return to Top. Contact Customer Service Newsroom Contacts. Connect Email Newsletter Facebook Twitter Pinterest Google Instagram. Subscribe iPad app HoustonChronicle.
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