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Strategic Management Assignment : Diversification

   

Added on  2021-04-21

11 Pages3652 Words122 Views
Running Head: Strategic Management Strategic Management

Strategic Management 1Table of ContentsIntroduction......................................................................................................................................2Concept of diversification and types of diversification...................................................................2Concept of Diversification...........................................................................................................2Types of differentiation................................................................................................................3Benefits and diversification.............................................................................................................4Dangers of Diversification...............................................................................................................5Critical comments on Whittington’s statement...............................................................................6Conclusion.......................................................................................................................................8References........................................................................................................................................9

Strategic Management 2Introduction Diversification is a strategy which is used for the purpose of expansion of business in the existing marketplace or in the other fields of market. Primary aim of implementation of this strategy is to enter into a new market with a new product or service or launching the existing product by adding unique and attractive features for the purpose of re-launching in the existing market. This strategy sometimes acts as the part of defensive and offensive set of strategies. It is one of growth strategies described under Ansoff Matrix model. The statement “Diversification is a perfectly logical development, ensuring the rationale and efficient use of resources” defines that diversification is implemented in the workplace with the objective of ensuring success and growth (Aspara, et. al., 2011). When a business enters into a new market, lot pf challenges and opportunities comes which needs to be faced in an effective manner so that desired goals could be acquired. For the same purpose, diversification strategy is implemented in the workplace. In this essay, several aspects of the diversification, its correlation with the other aspects of Ansoff Matrix framework will be covered. Along with this, strengths and weaknesses of diversification strategy will be covered. Further, tools which describe relation between external business environment and diversification will also be discussed. Concept of diversification and types of diversificationConcept of Diversification Diversification is a risky section of Ansoff Matrix as business organizations does not have much experience in the new market, thus, the chances of product’s succession are very less. Ansoff Matrix has defined four growth strategies i.e. market penetration, product development, market development and diversification. As per Ansoff, diversification strategy is unique and distinct from other three growth strategies because the risk level is pretty high in diversification. The firstthree strategies are applied in the workplace with the help of existing technical, financial and merchandising resources which company already using for its existing product line. But in case of diversification, organization requires to adopt new set of strategies along with new technological and facilities. Acquisition of new skills and knowledge is also required in

Strategic Management 3adaptation of diversification strategy with the objective of successful expansion of business in new markets with new products (Kumar, Gaur & Pattnaik, 2012).Before implementing diversification strategy in the workplace, organization is required to conduct market research and related strategies so that the target customer’s needs, market environment, competitors involved in the industry, strategies used by them, etc. elements needs to be considered. This helps the organization to introduce and promote new products in new marketplaces with the objective to gain success and growth. Product diversification is a concept under which new products and existing products are being manufactured and promoted in new marketing conditions so that business could be expanded. Various companies have also adopted the method of expansion of existing product line under which a new product is being launched related to the existing product (Villarreal, Cusimano & Renner, 2015). For example, tooth paste manufacturing firm launches tooth brushes and tooth powers under the same brand name. Companies also use product extension and brand extension in order to uplift sale volumes and the number of customers with the objective of increase market share in the target or in new market (Whittington, 2014).Types of diversification In order to establish a sustainable competitive advantage in the target market along with implementing the differentiation strategy, it is required to make a clear understanding regarding differentiation strategy. The rationales on which differentiation strategy is implemented in the workplace are customer needs, quality of product and services and competitors. Product differentiation has various approaches and this is carried out at workplace with the core business objective of gaining competitive advantage through adding unique features in their existing products or by launching totally different product for making a separate image from its competitors. There are various means through which product differentiation could be carried out in a business such as product differentiation, image differences, service differentiation and many more (Martin, et. al., 2012). Through adaptation and implementation of differentiation strategy within workplace, organization could gain success and growth by using the existing brand value which will help them to successfully launch the product in the new market along with avoiding the direct confrontation with the competitors. Therefore, it could be said that differentiation is an

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