Firm founders, investors, and executives typically consider expansion strategies like diversification once the company has grown to a certain extent.
But what exactly is a diversification strategy, and why is it effective in business management? Go on reading to learn all the essential information on the topic and get inspired by diversification strategy examples.
🔝 Top-10 Diversification Strategy Examples
- UAE Economic Performance in 1991-2012
- Unemployment in the United Arab Emirates among Locals
- Diversification Strategy in Business
- Eastman Kodak Company's Marketing Analysis
- Amazon Company's Rivalry in the E-Commerce Industry
- Economic Diversification Strategy in Dubai
- Electrolux Company's Business Studies and Strategy
- The Coca-Cola Company's Grand Strategy
- Nokia Company's Success Exploration
- Jones-Blair Company's Product Marketing Problem
📍 What Is a Diversification Strategy?
The term “diversification strategy” refers to an approach to expanding a company’s operations by creating and selling additional products and services or penetrating untapped market niches. Any company, whether it’s failing or thriving, can benefit from a well-planned diversification strategy.
What Companies Use Diversification of Strategy?
Companies that adopt a diversification strategy are companies that:
- Seek to increase revenue;
- Experience a decline in business;
- Want to maximize synergies;
- Want to reduce economic risks.
📊 Diversification Strategy Analysis: the 6 Types of Strategies
The 6 key types of diversification strategies are:
|Horizontal diversification||Suppose an organization decides to add items or services unrelated to what they offer today but can solve some demands of its existing clients. In that case, this is known as horizontal diversification. They are still dealing with well-established markets and consumer bases in this case. Say you’re the CEO of a Paper Company. It could make total sense to enter into the manufacture of printers.|
|Concentric diversification||When a business enters a new market with a product that is technologically related to its existing goods, it is said to be engaging in “concentric diversification,” as it capitalizes on its expertise in the field, its technical know-how, and its established production methods. A company that moved from producing bulky desktop PCs to producing portable, lightweight laptops is one example of concentric diversification.|
|Conglomerate diversification||Conglomerate diversification is the practice of expanding into unrelated markets with unrelated products to reach unrelated consumer groups. Conglomerates are companies that span various industries yet are owned by the same parent company. An example of conglomerate diversification would be Tata Group, which was created in 1868 and expanded from its humble origins as a hotel firm into a global multinational spanning 100 different enterprises.|
|Vertical diversification||Vertical diversification occurs when a firm moves up or down the supply chain by joining two or more phases of production traditionally managed by different organizations. When a corporation decides to become “vertically integrated,” it means that it will begin to handle all aspects of making and selling its main product, from sourcing raw materials to putting together finished goods and distributing them to customers.|
|Defensive diversification||Defensive diversification is a strategy that helps a company avoid collapse. When a company’s core market or product line becomes oversaturated, mature, or in decline, or when they are losing ground to competitors, the company may engage in defensive diversification to ensure continued viability.|
|Offensive diversification||When a business actively seeks to increase its profits and market share by expanding into other areas and attracting more consumers, it is engaging in offensive diversification. Offensive diversification allows a company that is already doing well to expand even further.|
🏅 3 Best Diversification Strategy Examples
Here are some diversification strategy examples from 3 major companies:
LMVH Diversification Strategy
Following their merger in 1987, Louis Vuitton and Moet became the cornerstones of the LVMH business portfolio. In 2002, Moet Hennessy Louis Vuitton had 12.2 billion euros in yearly sales, making it the largest luxury goods retailer in the world.
The finest wine, champagne, clothing, jewelry, and fragrance labels are all available from LVMH. LVMH has expanded its media holdings by purchasing newspapers, magazines, radio stations, an advertising agency, a press agency, and many online businesses.
Expansion and internal growth occurred through utilizing shared techniques and generating strategic advantages across the portfolio. The businesses of these corporations have all proven their dedication to originality, innovation, and high quality.
Apple Diversification Strategy
In 1984, Apple introduced the Macintosh PC. Beginning in 2001, Apple sold its first iPods and made available iTunes software to manage them (2003). Subsequently, in 2007, with the introduction of the innovative iPhone, Apple won the diversification jackpot for real. Although it wasn’t the end for Apple. Tablets, watches, smart audio, and even electric cars are now among the many new product lines for the tech giant. Apple implemented a diversification strategy that would ultimately preserve the company and propel it to the ranks of the world’s largest enterprises.
Tesla Diversification Strategy
The Tesla brand has built a reputation for producing innovative, high-quality goods with sophisticated designs. For instance, before it manufactured its product even began, the Model 3 had already racked up over 300,000 pre-orders. In 2016, Tesla’s CEO revealed the company’s desire to buy SolarCity, signaling a further acceleration of Tesla’s diversification strategy.
Realizing its long-term goal of making the world run on solar energy was the driving force behind the company’s decision to diversify its business model. Tesla’s dedication to green energy has won over consumers all around the world. The production and transportation of automobiles are the key sources of greenhouse gas emissions. Thus, Tesla’s choice to spend more on renewable energy generation has been crucial in elevating the company’s reputation.
Other examples of companies with great diversification strategies are:
📝 Diversification Strategy Research Paper Examples
- The Role of Tourism in the Economic Diversification Strategies of Oil Dependent CountriesThe study is important because it will help to explain the significance of tourism industry in the country’s economy and what can be done to improve it.
- Marketing Principles Concept in BusinessThe principles of marketing revolve around the governance of the major components of the marketing mix concept.
- Tesla Diversification – a Strategy of SuccessTesla diversification was the strategy that brought the company a competitive advantage. 🏎️ Read this article to uncover 🎁 Tesla's diversification & distribution strategy and learn more about company’s investments.💰
- International Management and Diversity FactorAs globalization and competition continue to affect businesses, diversity training becomes a strategic tool that organizations can use to foster sustainable growth.
- British Petroleum: Strategic AnalysisYear 2007 has been great for the BP. Highlights include increase in revenue and improvements in other financial indicators.
- DPWN Company: Case StudyPorter’s Five Forces for DPWN company, reasons of the success of DPWN, SWOT-analysis, market expansion strategy, diversification, and acquisition strategy.
- Nike: Case StudyNike has been a very leading company in the athletic footwear market. It has always given tough competition to its rivals Adidas.
- Ryanair in the European Low-Cost Airline IndustryRyanair's low model of growth has been leaned and aggressively sought by several low-cost airlines in Europe and in other parts of the world.
- BAT Company and the Structure Group, UK: Case StudyResearch indicates the primary goal of any business is to increase its market share in its industry in order to increase sales which in turn lead to an increase in profit levels.
- Sustainable Project Development in MarketingThe overview of modern marketing strategies and the manner in which marketing is to meet customers’ needs in accordance with the Internet-savvy world.
- Costco Wholesale Corporation: Company AnalysisThe Costco Corp. has analyzed its current situation according to some aspects, like business environment, globalization’s effects, diversification, and ethical issues.
- Cemex Company's Strategic AnalysisCemex Company has grown tremendously from a local manufacturer of cement in Mexico to become the third-largest cement company in the world only behind Lafarge and Holcim.
- Global Gadgets Imports Firm's Marketing StrategyProduct diversification will be achieved through the introduction of housewares goods as part in addition to the existing product line of Global Gadgets Imports.
- Southwest Airlines: Strategic AnalysisThe study is a strategic analysis of “Southwest Airlines Co.” as the biggest passenger airways in the U.S.A as well as one of the prominent global players in the aviation industry.
- Apple Incorporation's Strategic AnalysesThe paper discusses the internal and external environment of Appl. Various models assist in the analysis, including PEST factors, Ansoff matrix, Porter’s five forces.
- The Customer Services at TESCO SupermarketCustomer relationship management from the point of view of Tesco has been examined. The research paper has examined enhanced regulation adherence and customer service at Tesco.
- Furniture Company: Marketing Research and EnhancementThis report identifies the future changes in the trends of the furniture market and also recommends possible strategies which can be helpful to recover from this situation.
- Report on George at ASDAThis paper is a report on the business operations of George at ASDA in the value clothing market in the UK and the challenges it faced in the market.
- The Bank’s of America Standards and TacticsDescription and analysis of the Bank of America standards and tactics in marketing segmentation which help in the building up of excellent products in the industry.
- Trends in Consumer PreferenceAccording to Barrow, the prevailing trends in the market may be looked at from the perspective of consumer preference and from the perspective of product development.
- Managing Change and Innovation in SMENewer process generation, implementation and evaluation are integrated part of organisational innovativeness in terms of operation and management.
- ‘Ansoff Matrix’ Application in EnterprisesThis matrix is used by marketers who have objectives for growth. And it offers strategic choices to achieve growth objectives for a company.
- Emaar Saudi Investment: Company AnalysisEmaar - is a Middle Eeast company which is into real estate development. The main purpose of the company is to provide new infrastructure across the countries.
- Benihana of Tokyo: Case StudyThis report identifies the present strategy of Benihana, key elements of the overall strategy, resources, types of financing that are being employed, and growth plans.
- Unilever: Developing HRM Strategy to Support Organizational StrategyIn this is paper it examines the gradual HR policies, functions, and strategies which contributes to the acceleration of the company. Unilever is a global company.
- Strategic Analysis of Coach IncThe report of Coach Inc begins with a strategic analysis of the company with a detailed SWOT analysis of the organization based on its current position.
- Sprague Warner-Kenny Corporation: Company InformationDue to its uniqueness and diversification of the food industry, its share price raised three times above in 1946; later on, it had named Consolidated Foods Corporation.
💡 Essay Ideas on Diversification Strategy
- Russian Resource Dependency: An Argumentative AnalysisThe following discourse is an analysis of Rudiger Ahrend’s article “Can Russia Break the “Resource Curse”?”, which concerns the economic status of 21st century Russia.
- Diversity at Workplaces and Management StylesWorkplace diversity brings to the organization special attributes such as uniqueness as well as challenges that force the organization to put in place mechanisms.
- Ryanair: The Low-Fares AirlineFrom 1990 until today, Ryanair established itself as a low fare and no-frills airline in Europe followed by the business model of South West Airline of the USA.
- Tukster Hotel: Business StrategyThe context of the business strategy of the Tukster Hotel will involve the in-depth analysis of the resources, capability, competitive advantage, and strategic formulation.
- Internship Program at Monsanto CompanyMonsanto provides franchise to other seed production companies. The company has an elaborate chain for distributing its products.
- Impact of Diversity Forms in WorkplaceDiversity can be defined generally as the act of acknowledging, understanding, celebrating and valuing the differences that exist among people.
- Marketing Plan for Kraft FoodsThe marketing plan relates to Kraft Foods Incorporation which is a firm that operates within the United States food processing industry.
- Sheikh Mohammed and the Making of “Dubai, Inc”Sheik Mohammed began his journey to leadership while he was only 19 years. Dubai Inc. is a conglomerate owned largely by sheik Mohamed who is also the leader of the government.
- Crown Equipment Corporation Company AnalysisCrown Equipment Corporation started as a manufacturer of temperature controls for coal-burning furnaces as well as television antenna rotators.
- Why Macy’s Inc. Cannot Keep Up With Online Competition?The target organization of this project is Macy’s Inc., which is one of the largest department stores in the United States, a retail store that supplies various products.
- Backwell IXL: Company AnalysisThis report describes the management fundamentals and quality management concepts of Backwell IXL Company regarding its historical background, company structure, strategy, product.
- Managing Finance by InvestmentThe paper discusses the perspective techniques of a consultant firm and develops strategies in investment opportunities with real and successful markets.
- Critical Evaluation of Marketing Strategies PepsiCoPepsiCo urgently requires a critical analysis of its marketing strategy in order to identify what needs to be done for it to recapture its position.
- Diversity of Danford ProductsDanford’s leadership does not appreciate the idea of diversified workplace ethics, and it openly discriminates against women for holding managerial positions.
- Barnes and Noble Business and Industry OverviewIn 1986, Barnes & Noble stated its journey incorporating under the US Company Act as a bookseller dealing with academic, commercial, and technological books.
- Credit Risk Management in British BanksThis paper demonstrates that British Banks have a risk conscious-culture and their credit risk management techniques are a combination of traditional and new ways of credit risk management.
- Professional Management and LeadershipPersonal and professional development are integral parts of building careers and acquiring new skills for future managers and leaders.
- Analysis of the Rebirth of IBMIBM is the pioneer of the IT industry that has a chronological evolution of more than a century. The study addresses the company's history within the era of the fall to Rebirth.
- Tempur Sealy International PerfomanceThe strategic analysis will discuss the performance of Tempur Sealy International relative to its technology industry.
- MTN Ghana Company's Analysis and Future StrategiesMTN Ghana is a successful business that has been operating in Ghana since 2008. It benefits from MTN’s best corporate practices and has a stable position in the market.
- Facebook: External and Internal EnvironmentsThis paper gives a detailed analysis of Facebook’s external and internal environments and strategies that can sustain its performance.
- Google's Corporate Strategy, Problems and SolutionsThis paper provides a comprehensive assessment of Google's corporate strategy and identifies its strategic problems.
- Apple and Samsung Firms' Confronting StrategiesApple and Samsung are the world's front smartphone companies, they are corporations with entirely different strategies, capitalization, and market behavior.
- Discussion of the Strategy Failure of Sears CompanyThe paper discusses Sears decline can be attributed to strategic mistakes, including diversification, corporate merger with Kmart, and poor management.
- Strategic Management Elements: Exploration and ExplanationThis paper is aimed at exploring and explaining such elements of strategic management as strategy formulation, strategy implementation, diversification, etc.
- Forever 21 Company’s Turnaround Strategy ReportThis paper provides an overall strategy that will help turnaround Forever 21’s current condition and continue as a going concern company.
- Discussion of Diversity and Ethical CodesThe paper discusses organizations should encourage diversity in workplaces to ensure that all individuals can work in a particular company.