WHAT IS CONCENTRIC DIVERSIFICATION??
-Concentric diversification focuses on creating a portfolio of related businesses. -The portfolio is usually developed by acquisition rather than by internal new business creation -Adding new but related products or services
- there is a technological similarity between the industries, which means that the firm is able to leverage its technical know-how to gain some advantage - It also seems to increase its market share to launch a new product that helps the particular company to earn profit (Advantages)
1Enable a firm to attain synergy by
exchange of resources and skills
2)To avail economies of scale and tax
SLIDE 2 Concentric diversification is of three types:
MARKETING RELATED DIVERSIFICATION.
TECHNOLOGY RELATED DIVERSIFICATION.
MARKETING AND TECHNOLOGY RELATED
-Essar Group:- shipping, marine construction, oil
support services, and iron ,steel.
- Shriram Fibers Ltd.:- nylon industrial yarn,
synthetic industrial fabrics, nylon tyre cords,
fluorochemicals, fluorocarbon refrigerant
gases, ball and needle bearings
- The addition of tomato ketchup and sauce to the existing "Maggi" brand processed items of Food Specialities Ltd.
Value Chain is an analytical tool like SWOT to conduct an internal analysis while formulating a strategy. Resource Based View is another internal analytical tool. (RBV)
strategy - value chain analysis
Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Influential work by Michael Porter suggested that the activities of a business could be grouped under two headings: (1) Primary Activities - those that are directly concerned with creating and delivering a product (e.g. component assembly); and (2) Support Activities, which whilst they are not directly involved in production, may increase...
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