What Are the Advantages of Diversification?

A related diversification strategy refers to entering a new business that has a competitive and valuable "strategic matching relationship" with the company's current business in the value chain. Related diversification strategies can transfer proprietary skills, production capacity, or technology from one operation to another.

Related Diversity Strategy

Compared with unrelated diversification, related diversification strategies have the following advantages:

1. Can transfer proprietary skills, production capacity or technology from one operation to another;

2. Can combine related activities of different business operations to reduce costs;

3. You can borrow the reputation of the company's brand in new business operations;

4. Implement relevant value chain activities in a collaborative manner that can create valuable competitive capabilities.

5. Investor risk can be spread on a broader business basis.

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Concentric and diversified business strategy

Concentric and diversified business strategy is also called centralized and diversified business strategy, centralized and diversified business, concentrated and diversified, centralized and diversified strategy, concentric and diversified strategy, concentric and diversified strategy, coaxial and diversified, coaxial and diversified, concentric and diversified Association polyhedronization . It refers to the strategy of taking a major product as the center, making full use of the product's advantages in technology and market, and continuously spreading outward to produce a variety of products and enrich the product series structure. It is the use of the original production technology conditions to manufacture new products with different uses than the original products. This development strategy is conducive to the use of existing technologies, resources and channels. For example, automobile manufacturers produce automobiles, as well as tractors and diesel engines.