This downward trend is likely to continue as smoking becomes less and less attractive in many countries. To save their company, Zippo executives want to diversify.
The high-quality image of Swiss Army knives has been used to sell Swiss Army—branded luggage and watches. As of March , Zippo was examining a wide variety of markets where their brand could be leveraged, including watches, clothing, wallets, pens, liquor flasks, outdoor hand warmers, playing cards, gas grills, and cologne.
Trying to figure out which of these diversification options could be winners, such as the Eddie Bauer-edition Ford Explorer, and which would be losers, such as Harley-branded bottled water, is a key challenge facing Zippo executives.
Not much, but that did not stop Globodyne from buying each of these companies in its quest for synergy in the movie In Good Company. Synergy is created when two or more businesses produce benefits together that could not be produced separately. While Duryea was confident that a cross-promotional strategy between his advertising division and the other units within the Globodyne universe was a slam-dunk, Waterman employee Dan Foreman saw little congruence between advertisements in Sports America on the one hand and cell phones and breakfast cereals on the other.
Seeing little value in owning a failing publishing company, Globodyne promptly sold the division to another conglomerate. After the sale, the executives that had been rewarded for the initial purchase of Waterman Publishing, including Duryea, were fired. AP News. Herper, M. Mack, E.
Porter, M. From competitive advantage to corporate strategy. Harvard Business Review , 65 3 , — Prahalad, C. For more information on the opportunities available to businesses, why not check out our recommendations for podcasts or start-up books!
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Continue browsing to accept, or for more information or to learn about changing your settings visit our privacy page. What Is Diversification Strategy? Diversification is the answer. What is Diversification? Growth Strategies Diversification is one of four different growth strategies popularised by Igor Ansoff.
They are: Penetration Product Development Market Development Diversification Penetration refers to entering the market at an incredibly low sale price in order to price out your competitors. What are the types of diversification strategies? These are: Concentric Diversification Horizontal Diversification Conglomerate Diversification Concentric Diversification Concentric diversification refers to the development of new products and services that are similar to the ones you already sell.
Horizontal Diversification Horizontal Diversification refers to the development of new products that are somewhat related to your original lines. Conglomerate Diversification Conglomerate diversification refers to the development of new products that are unrelated to your original lines. Chat to our team about your funding strategy - we can help.
What companies use a diversification strategy? Therefore, the companies who are using diversification strategy are those who: Need to mitigate market risk Need to protect their business from the competition Need to increase their profits and variety of products stocked However, this means that the types of companies using a diversification strategy are usually under pressure.
Mitigate Risk In times of market volatility or downturn, businesses will look to introduce more products into their line. Competition When competition is strong, businesses will tend to compare their strategic assets to provide a competitive advantage.
Profits Finally, businesses may choose to diversify in order to raise profits. HubSpot : inbound marketing giant HubSpot began as a software solution targeting small businesses with employees who needed a more streamlined way to manage their content and customers.
As their popularity and demand grew, Hubspot diversified its software to cater for enterprise-level needs. Mailchimp : In early , email software provider Mailchimp announced that they were diversifying their product and expanding into the lucrative CRM market.
This caused many existing customers to exit. In summary, a diversification strategy can be a goldmine in terms of reach and revenue, but it comes with an element of risk.
Companies should look to pursue other growth strategies first, and only consider diversification once their current product or current market no longer offers opportunities for further growth. With careful planning, analysis of customer needs, and a keen sense of current marketplace trends, a well thought out diversification strategy can be just what you need to help your business grow and evolve.
Want more marketing strategy and insights to scale your startup? Subscribe to our free email newsletter to get our latest stories delivered to your inbox about twice a month. The Startup Finance Blog. Everything you need to know about funding, growing and scaling your startup. What is Diversification Strategy? Definition and Examples Jan 24, By Rachael Pilcher.
Better Off Test — Will the new unit and the firm be better off? Unless one side or the other gains a competitive advantage, diversification should be avoided. Related Diversification Because it leverages strategic fit, companies that engage in related diversification are more likely to achieve gains in shareholder value. Example 7. Porter, M. From competitive advantage to corporate strategy. Harvard Business Review, 65 3 , — The core competencies of the corporation.
Harvard Business Review, 86 1 , 79— Previous: Vertical Integration Strategies. Next: Strategies for Getting Smaller.
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