Product diversification

Diversification Strategy is a strategy that increase sales of new products in new markets. (Mongkolchan, 2013) Which can be divided into two types:
# Growth of new business related to the same business (Concentric Diversification), as the company sold the slippers. Turn to some sports shoes or turn sold socks and so on.
# The growth of new businesses that are not related to the original business yet. (Conglomerate Diversification), as the company sold mobile. It is turned to real estate and so on.
Current business is highly competitive so that companies can achieve both increased profitability. Share market more so each department within the organization need to be adjusted significantly. The agency, logistics, and supply chain need to be adjusted as well. Because of such strategic logistics today. So try to focus on key issues; the major cost reduction, capital Reduction and the improvement of services.
Advantage and Disadvantage of diversification
(UK Essays, 2013) had discussed the advantages and disadvantages of diversification using the criteria of related and unrelated diversification follow us:
Related Diversification
Advantages and Disadvantages:
*The advantage of Related strategy is the expansion of the product will be easier because you are familiar with the industry and do not take advantage of their knowledge and experience with the products.
*The disadvantage of this strategy is that if the cyclical downturn in the industry. It will result in a slowdown in both dealerships and in every process. There may also be problems with the combination of the two businesses and have more than forecast financial results.
Unrelated Diversification
Advantages and Disadvantages:
The benefits of unrelated diversification of company are reducing the risk of placing "All your eggs in one basket", and if the trade or industry is hit hard by the market or the competition or success factors other occupied unrelated business also may help offset the downturn that may occur in the future.
Advantage and Disadvantage of Product diversification
(Cheembo, 2009) said Diversification refers to the strategic direction to take the company titanothere product or market development by means of either internal or external to your business.
Advantages
*The control inputs that contribute to the continuity and quality improved. For example, 1984and 1985 NewsCorp acquired Twentieth Century Fox Television Stations and six of etromedia Broadcasting Group in the US This acquisition provides a company with a broader platform for the consolidation of related activities through access to the studio for film and television.
*Can control the market by sales, warranty, and the supplier. This can be achieved through a combination of links in the value chain. For example, the production and sale of the same or a better brand or corporate identity to beneficiaries in the new market.
*It leverages the expertise, knowledge and resources available in the company's existing ideas to expand into new activities. Such as research and development of knowledge and the sharing of resources and so on.
*Good control risks associated that will make up of monopolies in the single market.
*The spread of risk, which can be compared with the "Do not put all your eggs in one basket".
*Reduction activities to reduce the decline in profits.
Disadvantages
*May cause a slowed growth in our core business.
*Have increased costs of performing new productivity.
*Adding to the complexity of such systems within the organization, in addition to the financial costs associated with other more sophisticated. The neediest to coordinate and control activities are the main activities.
*Maybe losses occur during the process of consolidation in the market, resulting in some business units. It may be contributions from other units to help as may be required to take the money from elsewhere to help in the production of the new company. Companies that want to diversify their products.
*When diversification of products, the results from the distribution to the market, then it may result in negative performance.
*Diversification of companies that want to extend to areas other than the location of the company. Organizations need to manage the complexity of the different political and legal requirements of different countries in which the organization is interested in control. For example, Rupert Murray's non-US citizens are not allowed to have more than 25% of any broadcasting license. As s result, he was forced to become a US citizen in 1985.
*Diversification across trading businesses. May result in catastrophic failure of a mismatch between the core of the learning experience of the buyer and the acquired businesses.
Conclusion
When the business strategy of diversification that you need to consider a few things to make it a success. Diversification can help the business achieve its potential in the market, it will help companies increase their clientele by attracting new people and keeping people honest. It also enhances the Group's business by launching products that comply with the existing products on the market. The company must have sufficient knowledge about diversification so that no problems will occur in the future. The management team of the company must be well trained and educated about the process to be followed. Lack of information and knowledge about the latest trends in the market can be really upsetting for their business goals. Business owners need to be sure that when using this strategy in the company. Companies will be able to manage what will happen as well.

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