campaign to convince architects, builders, engineers to design multi- story office blocks using steel rather than concrete for the structural frame of buildings. Product diversification involves addition of new products to existing products either being manufactured or being marketed. Expansion of the existing product line with related products is one such method adopted by many businesses. Adding tooth brushes to tooth paste or tooth powders or mouthwash under the same brand or under different brands aimed at different segments is one way of diversification. These are either brand extensions or product extensions to increase the volume of sales and the number of customers. 2.3.1 COMPANIES THAT HAVE SUCCEEDED USING DIVERSIFICATION STRATEGIES: …show more content…
By 2006, Wesfarmers ranked among the 20 largest companies headquartered in Australia based on the market value of its stock. Wesfarmers became a five-division corporation with a wide spectrum of enterprises, from supermarkets to coal mining to the sale of chemicals, fertilizers, insurance and industrial safety products. 2.3.2 SEVEN STEPS TO SUCCESSFUL DIVERSIFICATION There are seven key steps for successful diversification which are as follows: Firstly; Establish a supportive corporate center– Assemble a corporate headquarters staff that adds value to the company’s divisions but does not provide detailed operational direction. The home office should primarily supply basic support, including regulatory compliance, corporate governance, accounting and financial reporting. In addition to these functions, some central offices also handle corporate planning, human resources and investor relations. Secondly, Select capable division managers– Bidvest follows a policy of hiring division managers who perform as if they were “owner-managers” of their divisions. Michael Chaney, former chief executive officer of Wesfarmers, hired division managers who offered “emotional intelligence,” not just technical …show more content…
Wesfarmers’ Chaney believes firms should reject narrow operational goals like “being the world’s biggest something.”The success of these companies confirms the potential power of diversification. All four firms took similar actions to build their business portfolios and adhered to seven essential steps to manage the issues that diversification commonly entails. In fact, if the financial performance of any of these four companies worsens in the future, the reason probably will stem from failure to follow one or more of these seven steps. 2.3.3 TYPES OF DIVERSIFICATION STRATEGIES The strategies of diversification can include internal development of new products or markets, acquisition of a firm, alliance with a complementary company, licensing of new technologies, and distributing or importing a products line manufactured by another firm. Generally, the final strategy involves a combination of these options. This combination is determined in function of available opportunities and consistency with the objectives and the resources of the company. There are three types of diversification: concentric, horizontal, and conglomerate. 2.3.4 Concentric
The diversification lowered the overall risk of the firm and created an information network among the divisions, which was critical for the company to gain competitive advantage. The loyal customer base was another strength. The $60 billion assets that under the company’s management provided the company a positive brand image and made it easier for the company to attract new customers. Weakness:
A huge sum has been invested, so now it is really crucial for the product to succeed. Moreover the current product mix is not sufficient to bring long term profits for the company. As far as short term goals are considered, management wanted a successful launch for the product which will provide the right marketing and target of the new product line. While the long term goals involved adding variety and diversity to the product line to achieve a long term sustainable growth rather than just achieving short term
But product differentiation requires a lot more efforts in research and development as
Diversification: Upstream integration with suppliers, Sephora exchanges data collected from their digital channels with their manufacturers for new products development. Role of Sephora digital channels in company’s marketing mix Product: Sephora has more than 250 brands with approximately 13,000 products which include skin care, makeup, bath, fragrance, beauty accessories, hair products as well as other beauty and body care products and each of these categories has various sub-categories (CNBC, 2017). The company's product offering is able to meet the diverse customers' needs. Even though most of the products sold by the company were manufactured by so many other brands, each of these brands have a different product concept which aligned
Abraham Zaleznik in his article, “Managers and Leaders: Are They Different?” (1977) puts forth a claim that in every aspect of personality and reaction to certain events, managers and leaders are fundamentally different from each other. In this paper, I shall summarize Zaleznik’s argument and subsequently his reasons and evidences to make such a claim. To build on his main claim, Zaleznik at first creates a fine line between managers and leaders based on their personalities. He states that a manager operates in the realms of rationality; his reasons being the structured, ordered environment managers exercise their power in: the business organization.
Besides that, product differentiation is one of the threats of new entrants. Starting a new business we need to use a lot of money for advertising to attract customer, but we have to create our new things that cannot found in others competitors. For non-traditional barriers to entry, we have unique business model. We created a business with a unique design and establish a network of relationships that makes the business model work so that no people can easily to copy our
D) Marketing Plan (4Ps) Marketing Mix (4Ps) • Product – Divide product into three categories for different market o High-end function, design, and price – to target high-end group. The function will feature the highest potential such as child protection lock, built-in coffee and toaster maker, rotisserie, new technology
Apple Inc. embraces diversification strategy as a means of promoting its viability in the market. Largely, the creation of the three products lines compounds the sources of the company’s income. In fact, the company does not rely on a single source of income because the product design belongs to different categories. This strategy cushions the business from suffering risks of associated with depending on a single business. According Hitt, Ireland, and Hoskisson (2014, p.135), the benefit of handling many products is that when one product fail or does poorly in the market, the business is would shift its attention of the best performing products.
This model is considered as the most potent and useful tool and is widely used by organisations. This model deals with external factors that influence the nature of completion and internal factors how firms compete effectively to be more profitable. Porter’s 5 forces is used. Industry Rivalry : Porter (1980) reiterated that intensity of rivalry is dependent on number and size of direct competitors as numerous and/or equally balanced competitors may lead to intense competition. The rivalry for market share becomes intense when product differentiation and switching costs are
After these companies go about developing products, which may be product modification or it may be a completely new product. Product offerings are increasing every year as consumers are looking for more and more variety of products. Companies which are unable to churn out new products fall back on competition and suffer the consequences. Companies face danger not just from competitors but consumer needs, technology, and product life cycle. New product development has its share of challenges.
1.2. Product Differentiation This refers to differentiation that aspires to make a product more attractive by contrasting its unique qualities with other competing products (Investopedia, 2015:1), as in the case of Coca-Cola, other soft drink brands. Successfully adopting this strategy would have a company gaining a competitive advantage, as the customer would then view the product as unique or superior. This is what coca cola has managed to do, and has managed to do it on a scale that is globally unique, and globally recognized.
Therefore, new companies could enter without needing large amounts of capital. • Product Differentiation: Although there is some level of differentiation among ingredients and flavors, predominant similarities exist among current products. New companies could
The firm’s networks (Miller, 2006), resource endowment (Kor and Leblebici, 2005), processes and systems (Galan and Sanchez‐Bueno, 2009), which are flexible, may influence concentric diversification along with other external factors like industry characteristics, regulatory impact, and timing of entry (Brouthers and Brouthers,
1. What corporate diversification strategy is being pursued by Sany? What evidence do you have that supports your position? The Sany Heavy Industry Co. Ltd might be a company pursuing a low level of diversification which uses a single business corporate strategy.
Introduction The following strategic analysis report was carried out for Giant Hypermarket in Malaysia. Giant Hypermarket also popularly known as “Giant” is a subsidiary of Dairy Farm International. The objectives of the study is to advise the Board of Directors into a possibility to revisit and redesign the current business strategy based on the blue ocean strategy (Kim and Mauborgne, 2005) to provide value based innovation via cost reduction with increased value for buyers and to ensure sustainable business operation in Malaysia. Additionally, the analysis also includes the possibility of developing a global strategy for Giant.