Question: Which Is The Example Of Related Diversification?

What is an example of diversification?

Diversification: create new opportunities by creating new products that will be introduced in new markets.

When you hear the word Disney, what comes to mind.

Many people think of Disney movies such as Cinderella and Beauty and the Beast or theme parks like Disneyland and Disney World..

What is Amazon’s diversification strategy?

For Amazon, they have an unrelated corporate diversification. This means that they pursue numerous different businesses, and there are little to no linages between them. Consider their foray into cloud services, electronics (including their home-grown Kindle), toys, tools, kitchenware, and more.

Generally, related diversification (entering a new industry that has important similarities with a firm’s existing industries) is wiser than unrelated diversification (entering a new industry that lacks such similarities).

With a related constrained strategy, a firm shares resources and activities between its businesses. Cable firms such as Comcast and TimeWarner Inc., for example, share technology-based resources and activities across their television programming, high-speed Internet connection, and phone service businesses.

What is diversification and its types?

Diversification is a strategic approach adopting different forms. Depending on the applied criteria, there are different classifications. Depending on the direction of company diversification, the different types are: Horizontal Diversification.

What are the reasons for diversification?

There are four most often cited reasons for diversification: the internal capital market, agency problems, increased interest tax shield and growth opportunities.

What type of diversification is Disney?

The Walt Disney Company’s diversification strategy can be classified as related linked. Disney is in the theme park, movie/TV production, TV broadcasting, and merchandising industries. … Several of these businesses market the same characters across them such as Mickey Mouse.

What is product diversification with example?

Product Diversification Techniques The manner in which a product is presented can be altered to make it available to a different audience. For example, a household cleaning product could be repackaged and sold as a cleaning agent for automobiles.

What is unrelated diversification strategy with example?

This is a good example of unrelated diversification, which occurs when a firm enters an industry that lacks any important similarities with the firm’s existing industry or industries. Luckily for Coca-Cola, its investment paid off—Columbia was sold to Sony for $3.4 billion just seven years later.

How do you explain diversification?

Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt at limiting exposure to any single asset or risk.

What is an advantage of unrelated diversification?

The benefits of unrelated diversification are rooted in two conditions: (1) increased efficiency in cash management and in allocation of investment capital and (2) the capability to call on profitable, low-growth businesses to provide the cash flow for high-growth businesses that require significant infusions of cash.

How do you use a diversification strategy?

First and foremost, companies diversify to achieve greater profitability. Diversification is used by businesses to help them expand into markets and industries that they haven’t currently explored. This is achieved by adding new products, services, or features that will appeal to the customers in these new markets.

What are three types of diversification?

There are three types of diversification techniques:Concentric diversification. Concentric diversification involves adding similar products or services to the existing business. … Horizontal diversification. … Conglomerate diversification.

What is retrenchment strategy example?

For example, a corporate hospital may decide to focus only on specialized treatments, and thus, realize higher revenues. Besides, a retrenchment strategy also results in reduction of the number of employees, and sale of assets associated with discontinued product or service line.

What is focus strategy?

A focus strategy aligns a company’s products and marketing with their targeted audience. … In this article, we will identify what a focus strategy is, and describe the steps to generate one that makes a brand stand out and market to the company’s niche audience.