The key types of business diversification you can think about

The key types of business diversification you can think about

Blog Article

Business diversification can take various shapes and kinds depending upon organisational structures and goals. More about this below.

In simple terms, business diversification is a business growth strategy that intends to increase revenue and acquire a larger market share. In this context, there is more than one strategy to consider depending upon the market and the business's size and objectives. For instance, concentric business diversification refers to the process through which companies introduce a new line of products or services that are like pre-existing offerings and stay within the same market. An example of this would be a transport and logistics business introducing a cruise line. Another diversification example that is considered more aggressive and generally riskier is conglomerate business diversification. This technique counts on introducing products or services that are entirely unrelated to the company's main industry. Of course, this would require the company to integrate brand-new markets and develop a brand-new consumer base, and companies like MSC France would validate that this technique requires substantial seed capital.

At present, there are many reasons for business diversification as the global market is more dynamic than ever before, so having a finger in every pie doesn't just reduce risks, but it can also unlock other benefits. If you're currently considering tapping new markets, there are numerous options that are known to be stable enough and promise substantial business growth. The field of logistics, for example, has gained a good deal of financier interest in recent years, and for good reasons. Transportation and logistics is one of the biggest industries in the international market, indicating that there are lots of opportunities for growth that you can capitalise on. What makes this industry more attracting for financiers and businesspeople is the reality that the services it provides are essential to the international trade of goods and services. Naturally, this is something that businesses like DP World Russia are more than likely knowledgeable about.

While the primary objective of diversification is increased profits, the benefits of business diversification far exceed bottom line profitability. For example, by offering a diverse line of products and having a presence in different markets and territories, diversification can help alleviate risks as stagnation or losses sustained in one market can be cancelled by earnings made in other markets. As such, diversification can provide several safety nets that keep companies in business in the event of an industry downturn. Following the same logic, diversification can also be leveraged as a pre-emptive defense mechanism against rival businesses as existing in more than one market lowers the threat of rivalry in a particular market. Beyond this, businesses that run in different markets and territories can benefit from favourable currency exchange rates and more fluid capital mobility. This is something that companies like Maersk Colombia are most likely knowledgeable about.