Expand business Essay Example | Topics and Well Written Essays - 1250 words

Expand business - Essay Example In other words, it is a process of undertaking two or more unrelated product lines for the purpose of diversification. The rationales behind adoption of this concept are: cost advantage by diversifying production activities, maximum utilization of resources and mitigation of risk associated with operations in single market (Wiersema & Bowen, 2008). The only relevance that can be developed among the products is that all four products of the company cover low, mid and high level markets. The luggage line covers the lower section of the market; the writing instruments cover mid-level consumers, while the LED TVs are sold at higher end of the market. Lastly, miscellaneous plastic and paper tags are useful across all kind of markets. In conglomerate diversification, it is difficult to relate diversified products of the same company as a part of same base. However, the brand equity of each product indirectly adds to overall brand equity of the company. Conglomerate diversification is a major growth strategy that brings forward different hidden opportunities that a company can pursue, when market for one of its line of business is saturated. It is important to realize that with product line diversification, a company can achieve greater market share and growth rate within comparatively small period of time. In addition, this is one of the most suited strategies for internationalization. In international venture, most companies pursue two kinds of strategies: horizontal or related integration and conglomerate or unrelated integration. The main advantages of related integration is that the company can continue growing in the same sector by producing or introducing similar or related product under the same branch. The following section focuses on product elimination, when a company switches from unrelated to related diversification strategy (Wan &