Diversification and Conglomerate Strategy for The Business Discussion
Diversification and Conglomerate Strategy for The Business Discussion
Part1: Please answer the question in a min of 200 words
You are a senior leader of a large company that has been considering a diversification strategy for the business. What factors would play into your decision whether to recommend a related (concentric) or unrelated (conglomerate) strategy for expansion?
Part 2: Comment/respond on the student post in a min of 150 words.
In a decision as a senior leader of a large company, when considering a concentric or conglomerate strategy for expansion my main concern would be those factors within the industry that may cause difficulty to implement due to monopolies, environmental, political, and/or socioeconomic factors. Concentric may be the best option if the industry implemented already has a shortage of resources and abundance or certain policies that may make it more difficult to establish a new product unrelated to the current portfolio. However, in industry where logistics for entering/exiting are not so intense then a conglomerate strategy may work better or just as good as a concentric strategy for diversification.
The main point would be to determine if there is high severities that will constrict a new product line within a current portfolio line, versus potentially establishing a related product that aligns similarly to the current product lineup. Many of the same factors would exist with this concentric diversification. You would limit the amount of work and resources dedicated to establishing and running another successful product. Some may look at certain environmental factors and make the decision based on foreseen profitability, however those factors that play into establishing that similar or new product will add or take away from any calculated profits. I would monitor competitors closely as a concentric strategy, while conglomerate strategies will open the pool to other industries and businesses already implementing various markets.
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