WELCOME TO OUR PRESENTATION. We Are The Group _________. Group Members. Topics Included. Presentation On Diversification. Definition of Diversification Levels of Diversification Reasons of Diversification. Definition of Diversification.
Definition of Diversification
Levels of Diversification
Reasons of Diversification
Diversification is a corporate strategy to increase sales volume from new products & new markets. Diversification can be expanding into a new segment of an industry that the business is already in or investing in a promising business outside of the scope of the existing business.
Samsung is the world’s biggest diversified company. We probably now Samsung best for its smart phones, tablets and televisions.
Another example is McCafe which at first was found in Japan and was amazed by its different style from traditional McDonald store.
McDonald's starting of McCafe is an excellent example of diversification. By starting McCafe, McDonald's is offering new products that were not available in traditional McDonald's stores. McCafe specializes in serving cafes, which attracts customers that usually don't come to McDonald's to eat fast-food . McCafe is also not only a product development. McCafe has its own section of the store and clearly distinguishes itself from the traditional McDonald store. The store has modern, yet relaxing mood. This is important to attract new market segments, probably customers that go to cafe not to satisfy hunger, but possibly to take a sip of coffee and chat in a relaxing environment. Thus, McDonald's McCafe serves as an example performing diversification by developing both new products and new markets.
Single Business Diversification Strategy:
Wm.wrigleyjr.company,the worlds largest producer of chewing and bubble gums, historically used a single business strategy while operating in relatively few product markets.
United parcel service (UPS) uses this strategy. Recently UPS generated 74% of its revenue from its U.S package delivery business and 17% from its international package business, with the remaining 9% coming from the firm’s non-package business. Though the U.S package delivery business currently generates the largest percentage of UPS’s sales revenue, the firm anticipates that in the years to come its other two businesses will account for the majority of growth in revenues.
Related constrained Diversification Strategy:
Campbell soup, Procter & Gamble ,Kodak and Merck & Company all use a related constrained strategy,a firm shares resources and activities between its businesses.
Related linked Diversification Strategy:
Johnson & Johnson, General Electric (GE) and cendant use this corporate-level diversification strategy.
Unrelated Diversification Strategy:
A highly diversified firm that has no relationship between its businesses follows an unrelated diversification strategy. United technologies, Textron, Samsung and Hutchison Whampoa Limited (HWL) are examples of firms using this type of corporate level strategy.
Using complex sets of resources and capabilities to link different businesses through managerial and technological knowledge, experience, and expertise.
Uncertain Future Cash Flows
Uncertain Future Cash Flows
Synergy and Risk Reduction