In the past year, businesses have had to reassess their business, revenues and profit forecast, and some have had to look at diversifying to reduce risk, increase profits and adapt to their business environment. As we move out of Lockdown and restrictions around the world, is there a need to review your diversification strategy? Horizontal diversification Acquiring or developing new products or services that are complementary to core business and current customer base. For example, a soft drinks business adds a new type of snack into its product line. You may require new technology, skills or marketing approach. Concentric diversification Adding new products that have technological or marketing synergies with existing product lines or industries, but appeal to new customers. For example, a mobile phone manufacturer starts producing tablets, with possibility to leverage existing technologies, equipment and marketing. Conglomerate diversification Adding new products or services that are entirely different from and unrelated to the core business. For example, Coffee Brewing company opens up a range of cafes. The risks are high, as this approach requires entry into a new market, but also to sell to a new consumer base. Vertical diversification Expanding in a backward or forward direction along the production chain of product range, taking control of one or more stages of the supply chain. For example, a technology manufacturer opens its own retail store. The need to diversify maybe for many different reasons, competitiveness, to expand business revenues.=, reduce risk, provide longevity,, etc. Whatever the diversification strategy, we are sure you have taken the decision lightly and wish you every success.
Do we have sufficient foresight for the skillsets needed
‘Jack of All Trades’ goes from derogatory to compulsory
To compete you need to be different
it is the beginning of a new year, risk management professionals are coming back to work refreshed ready for new challenges ahead.
