Corporate diversification strategy examples

A business diversifies by offering assorted goods and services, participating in new industries, or finding multiple uses for its products. You might chart this course to hedge against threats to your current business or expand your customer base and revenue sources.

Companies that diversify take advantage of their expertise in an industry or line of business, or of an abundance of financing or physical assets.

SM Lecture Six : Corporate Strategy and Diversification

Farms diversify by expanding product lines and using items both to sell and to use in production of other goods. Dairy farms produce milk as their core product, but from this root, a farm can branch into making related products such as cheese or ice cream.

A farm with enough space can grow different crops, thus having multiple product lines.

A restauranteur can tap revenue streams beyond serving meals in the restaurant. Grocery stores can carry the restaurant's line of salad dressings, marinades, or sauces, for example.

A restaurant might have a gift shop to sell gifts tailored to the restaurant, its menu, or community, such as cookbooks, travel books and videos, souvenirs, and postcards. The sporting goods market encompasses a customer base with diverse sports and recreational interests. Many retailers will have an assortment of choices to meet these needs.

For example, a store may carry shoes for runners, basketball players, golfers, soccer players, and baseball players. Sports and outdoor equipment includes balls, bats, gloves, shin guards, golf clubs, camping gear and fishing poles. Diversification has led outdoor stores to include outdoor apparel, GPS devices, and cameras along with the more traditional fishing poles, rifles, and tents. Construction equipment dealers diversify by branching out their goods, services and locations.

Geographic diversity can help a dealer hedge against a slowdown in construction or industrial activity in one region. Other dealers have added safety consultation, training, and construction materials such as pipes to their staples of maintenance and rentals.

Dealers may choose farm equipment to counterbalance significant drops in construction equipment sales and rentals. For example, by one estimate, construction machinery sales in dropped 40 percent against only a 5-percent decline in farm equipment sales. Some businesses merge with or acquire other businesses.

Congolmerate diversification can involve related or often unrelated enterprises.

Examples of Business Diversification | wunesajoc.web.fc2.com

For example, an entrepenuer might operate a restaurant, a car dealership, and a land development business under one umbrella. Financial considerations, rather than similarities among lines of business or other strategic concerns, predominate mergers and acquisitions.

Christopher Raines enjoys sharing his knowledge of business, financial matters and the law. He earned his business administration and law degrees from the University of North Carolina at Chapel Hill. As a lawyer since August , Raines has handled cases involving business, consumer and other areas of the law. Skip to main content.

Agriculture Farms diversify by expanding product lines and using items both to sell and to use in production of other goods. Restaurants A restauranteur can tap revenue streams beyond serving meals in the restaurant.

Diversification (finance) - Wikipedia

Sporting Goods The sporting goods market encompasses a customer base with diverse sports and recreational interests. Construction Equipment Construction equipment dealers diversify by branching out their goods, services and locations. Conglomerate Diversification Some businesses merge with or acquire other businesses. References 6 University of South Florida St.

Diversification and Corporate Strategy Construction Equipment Distribution: Spreading Risk, Increasing Your Odds"; Joanne Costin U. Bridger Penn State Extension: Diversification of Your Operation, Why National Federation of Independent Business: Diversifying Revenue Streams Outdoor Industry Association: Innovation, Diversification and Consumer Trends Boosting Vendor Confidence.

Resources 2 University of Northern Iowa: Understanding Diversification Strategy Train: About the Author Christopher Raines enjoys sharing his knowledge of business, financial matters and the law. Suggest an Article Correction. More Articles [Forward Integration] Example of a Company's Forward Integration [Product Development Strategy] Product Development Strategy for McDonald's [Market Development vs.

Market Penetration] Market Development vs. Market Penetration [Vertically Integrated Companies] Examples of Vertically Integrated Companies. Logo Return to Top. Contact Customer Service Newsroom Contacts. Connect Email Newsletter Facebook Twitter Pinterest Google Instagram. Subscribe iPad app HoustonChronicle.