There are three types of diversification: But with the passage of time it became difficult to manage much diversified activities of business organization. Risks[ edit ] Of the four strategies presented in the Ansoff matrix, Diversification has the highest level of risk and requires the most careful investigation.
When is horizontal diversification desirable? There are certain conditions that are favorable for the application of concentric diversification strategy. These strategies are known as diversification strategies.
The central organisational challenge is how to give as much autonomy to the individual businesses as possible while still retaining the advantages of corporate scale, consistency and cohesion. An alternative form of that Avon has also undertaken is selling its products by mail order e.
For example, a company that was making notebooks earlier may also enter the pen Canon diversification strategy with its new product.
Further insights The Canon case also helps us to explore in concrete terms two further key insights offered in the core competency perspective: In certain situations the conglomerate diversification strategy becomes effective enough to be pursued by the organization.
Even though the case was written before the theory of disruptive innovation was developed, it provides an excellent vehicle for exploring the nature of this process and the power of this perspective. Conglomerate diversification Canon diversification strategy lateral diversification [ edit ] Main article: Following are some of the guidelines which are feasible for this strategy.
The main insights that we are able to draw from it, and the connections that we can make to other cases, are still valued by students. Horizontal diversification strategy is less risky than conglomerate diversification because of the fact that the current customers of the organization are already exposed.
The first one relates to the nature of the strategic objective: Diversification strategies include conglomerate diversification in which new products are added in the pool of the business organization that are not related to the existing ones.
Going into an unknown market with an unfamiliar product offering means a lack of experience in the new skills and techniques required. However, it does not pivot on a particular decision challenge, so foreknowledge of subsequent outcomes is less likely to undermine its ongoing appeal.
In order to measure the chances of success, different tests can be done: Significant development The case was first published in when the Resource-Based View RBV was starting to make an impact on the strategy field. Types of Diversification Strategy Horizontal Diversification Strategies Conglomerate Diversification Strategies Diversification strategy actually minimizes the risk of loss in a business organization by splitting different categories of products in different markets geographically.
Diversification may be defensive or offensive.Another strategy is conglomerate diversification. If a company is expanding into industries that are unrelated to its current business, then it's. New core businesses for growth. Currently, Canon is in the midst of a grand strategic transformation designed to accelerate growth in our four new businesses.
CANON DIVERSIFICATION STRATEGY [pic] By: NURSYAH FAHMANSYAH RIZKI () Magister Manajemen Sistem Informasi Universitas Bina Nusantara DIVERSIFICATION Definition Diversification is a form of growth marketing strategy for a company.
It seeks to increase profitability through greater sales volume obtained from. The dominant generic competitive strategy adopted by Canon is differentiation.
The company deployed its technological capabilities and know-how in fine optics, precision mechanics, microelectronics and fine chemicals to develop innovative and state-of-the-art products, which were of better quality than those of its competitors.
Diversification is a corporate strategy to enter into a new market or industry in which the business doesn't currently operate, while also creating a new product for that new market. This is the most risky section of the Ansoff Matrix, as the business has no experience in the new market and does not know if the product is going to be successful.
Canon uses this as strategy of continuously developing and upgrading its products while at the same time aiming to ensure the loyalty of its customers. Diversification Diversification involves that Canon enter a new market with completely new products.Download