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Diversification

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What is this?

Diversificaiton is strictly a strategy that takes the organisation away from both its existing markets and its existing products. In this sence, it adically increases the organisation’s scope. In fact, much diversification is not as extreme as implied by the closed boxes of the Ansoff growth matrix.

Ansoff growth matrix

Bow D tends to imply unrelated or conglomerate diversifacation, but a good deal of diversification in practice involves building on relationships with existing products. Frequently too, market penetration and product development entail some diversifying adjustment of products or markets. Diversification is a matter of degree.

The future organisation

None the less, the Ansoff matrix does not make clear that the further the organisation moves from its starting point of existing products and existing markets, the more the organisation has to learn to do.

Which direction?

Diversification is just one direction for developing the organisation, and needs to be considered alongside its alternatives. The drivers of diversifacation, its various forms and the ways it is managed arethe main topics of this article.

Written by admin

oktober 5th, 2008 at 8:27 am