Analytical Methods in Production
DISCUSS THE FOLLOWING:
DIVERSIFICATION According to investment word. Com diversification is a portfolio to reduce exposure to risk by combining a variety of investments, such as stock, bonds and real estate, which are unlikely to all move in the same direction. It can also be defined as manufacturing business terminology used to describe the act of increasing choices for when to order what supplies from whom to bring products to the market. Assof [1957], he sees diversification as being one of four possible growth strategies of a business, these are; market penetration, market development, product development and diversification. Diversification is the final alternative; it calls for simultaneous departure from a present product line and present market structure.
The main aim of diversification in a company is to allow the company to establish itself apart from its current operation.
TYPES OF DIVERSIFICATION
Concentric diversification It specifies that there exist similarities between the industries in terms of the technology stand point. It is through this that the firm may compare and apply its technological knowhow to an advantage. This strategy aims to increase the market value of a particular product and therefore gain a higher profit.
The horizontal diversification It tackles products or services that are in a sense, not related technology to certain product but still pique the interest of current customers. This strategy is more effective if the current clientele is loyal to the existing product or services, and if the new additions are well priced and adequately promoted.
Conglomerate or lateral diversification Lateral diversification is where the company or business promotes products or services with no relation commercially or technologically to the existing products or services, however still interest a number of customers.
ADVANTAGES OF DIVERSIFICATION
DIVERSIFICATION According to investment word. Com diversification is a portfolio to reduce exposure to risk by combining a variety of investments, such as stock, bonds and real estate, which are unlikely to all move in the same direction. It can also be defined as manufacturing business terminology used to describe the act of increasing choices for when to order what supplies from whom to bring products to the market. Assof [1957], he sees diversification as being one of four possible growth strategies of a business, these are; market penetration, market development, product development and diversification. Diversification is the final alternative; it calls for simultaneous departure from a present product line and present market structure.
The main aim of diversification in a company is to allow the company to establish itself apart from its current operation.
TYPES OF DIVERSIFICATION
Concentric diversification It specifies that there exist similarities between the industries in terms of the technology stand point. It is through this that the firm may compare and apply its technological knowhow to an advantage. This strategy aims to increase the market value of a particular product and therefore gain a higher profit.
The horizontal diversification It tackles products or services that are in a sense, not related technology to certain product but still pique the interest of current customers. This strategy is more effective if the current clientele is loyal to the existing product or services, and if the new additions are well priced and adequately promoted.
Conglomerate or lateral diversification Lateral diversification is where the company or business promotes products or services with no relation commercially or technologically to the existing products or services, however still interest a number of customers.
ADVANTAGES OF DIVERSIFICATION