the growth objectives of a firm are quite restricted when the established product lines crosses its growth limit. the product line diversification takes place when the company seeks to enter new market segments with a completely different product or products. in the present case, when competition is very intense, “diversify or die” becomes the need of the hour for the marketers. the bush company, by resorting to synergistic diversification, has profitably expanded its market for a wide variety of its products, such as radios, transistors, two-in-one, three-in-one recorders, tv (colored and black and white) and videos. product line extension is another form of diversification that aim at reaching those market segments which the firm has not yet penetrated. product line extension may be valid if it is an area in which the consumers enjoy a wide variety of brands to choose from and are accustomed to switch over from one to another, or if the competitors lack a comparable product or if they have themselves expanded into these areas.
extension in the present product mix may be done by increasing the number of lines and / or the depth within a line. it involves the development of new varieties of an initial product or of take-offs that are similar to that product (not being a new product). in this type of diversification, the firm starts producing those goods which are quite unrelated to its product line. a firm may resort to more than one type of diversification at a time. for instance, a paint manufacturer may, for a long-range product, think of entering the market for sunmica; for an intermediate range, it can go in for paints that are pollution-resistant. for instance, textile industries producing sarees may find it desirable to bring out sarees of different types to cater to the needs of different classes of buyers.
product diversification is a strategy employed by a company to increase profitabilityprofitability ratiosprofitability ratios are financial metrics used by analysts and investors to measure and evaluate the ability of a company to generate income (profit) relative to revenue, balance sheet assets, operating costs, and shareholders’ equity during a specific period of time. diversification can occur at the business level or at the corporate levelcorporate structurecorporate structure refers to the organization of different departments or business units within a company. business-level product diversification – expanding into a new segment of an industry that the company is already operating in. for example, when a computer company that primarily produces desktop computers starts manufacturing laptops, it is pursuing a concentric diversification strategy. for example, a notebook manufacturer that enters the pen market is pursuing a horizontal diversification strategy. for example, if a computer company decides to produce notebooks, the company is pursuing a conglomerate diversification strategy.
conglomerate diversification requires the company to enter a new market and sell products or services to a new consumer base. additionally, the probability of failure is much greater in a conglomerate diversification strategy. therefore, companies should only pursue a diversification strategy when their current market demonstrates slow or stagnant future opportunities for growth. general electric commonly comes into discussions when talking about successful diversification stories. walt disney company successfully diversified from its core animation business to theme parks, cruise lines, resorts, tv broadcasting, live entertainment, and more. cfi’s mission is to empower anyone to become a great financial analyst through our financial modeling & valuation analyst programfmva® certificationjoin 350,600+ students who work for companies like amazon, j.p. morgan, and ferrari .
the product line diversification takes place when the company seeks to enter new market segments with a completely product diversification is a strategy employed by a company to increase profitability walt disney company successfully diversified from its core animation business to theme parks, cruise lines, resorts, a product diversification strategy is a form of business development. small businesses that implement the strategy can diversify their product range by modifying existing products or adding new, . product diversification is the practice of expanding the original market for a product. this strategy is used to increase the sales associated with an existing product line, which is especially useful for a business that has been experiencing stagnant or declining sales. diversification is a corporate strategy to enter into a new products or product lines, new services or new markets, involving substantially different skills, technology and knowledge.
what is product diversification? product diversification is a strategy used to grow a business through diversification is a corporate strategy to enter into a new products or product lines , new services or new markets, it may refer to a new company, a new technology, a new market, or a new product . so, product diversification means,
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