Is Diversification Being A Difficult Soul To Understand? – Business Ideas

Is Diversification Being A Difficult Soul To Understand? – Business Ideas

Brands usually pick ‘diversification’ as an activity to mock-up ‘insulation’ for revenue loss in a single stream. Even Ansoff can’t redeem the glib answer for diversification due to the turbulence and the economic conspiracy. Diversification provides the space for revenue flow to companies in ‘related’ and ‘unrelated’ fashion. Even the ‘unrelated ‘diversification brings a competitive edge to the brands in the nineties. The best example could be the virgin’s unrelated diversification into virgin trains, virgin money and virgin holidays from the core ‘virgin media’ which puts the chart with £ 15 billion revenues in the year 2012.

The transformation from just ‘Mail Order Company’ to 35 subsidiaries happens fruitfully through the ‘diversification guns’. Since days of the eighties and nineties are no more today and tomorrow’, and hence refining the ‘diversification rules’ will be the need of the hour.

What Do Companies Fail Then?

Diversification could be more similar to ‘sleeping pill’, where the positive impact could be assessed only through the ‘making numbers’. Even the most successful diversified conglomerate virgin, end up with the failure in ‘virgin cola’ diversification. Hardly virgin cola capitalized just 3% of market value in the homeland of UK at the time of closure in the nineties. ‘Virgin cola’ initiated for tapping the high growth fizzy drinks market, but blockage of distribution channels by the consistent players as well as the less rate of return over advertisement spending cremated the company within years. We may think that ‘carnivores over herbivores’ happens in the case of virgin failure, but even the biggest carnivores like coco-cola and national semiconductor end up as prey for diversification.

Destruction To Market Toppers

Is Diversification being a difficult soul to understand? – Business latest trends and strategies for entrepreneurCoco-cola‘s diversification into the apparel industry didn’t reach the market and closed certainly. If brand equity is the prime unit for success, why not the coco-cola apparel survives till date. Now, coco-cola develops out diversification in the same industry with a range from diet to orange. Though it terms as weaker diversification, there would be a thin line to state as the product development as per Ansoff.

Similarly, diversification to electronic consumer products from the semiconductor business wrecked the brand positioning of the National Semiconductor Corporation. The incurred loss from electronic consumer diversification gets filled by the profits of the semiconductor business. Non-suitability to the retail distribution diverts the success for NSC. Even the acquisition of the ‘Whatsapp’ for $19 billion by Facebook as a part of diversification does not replicate‘healthy growth’ for some years.

On the other screen, diversification pulled many brands into the limelight through the years. For example, Samsung being a vegetable vendor takes definite shape in the oil rigs, electronics, construction and hardware across the globe. Similarly, Nokia looks to be a wood pulp industry and turned as a leading mobile handset through the years. But at the same time, Nokia now reads its incredible story in the floors of Microsoft without competing with giants. If Nokia opted for weaker diversification in smartphone product lines, the story might be somewhere in the top stocks.

Is Diversification Losing Potent?

If brands move without a ‘natural selling point’, the risk associated will eat the competitiveness. ‘Jacks Of All Trades’ would not be more feasible in the market due to the market instability and intensity of turbulence. The inclination to growth and profit potential is more on certain industries, which makes the ‘red carpet effect’. Companies pitch their ‘unrelated diversification’ through brand visibility and brand score without thinking that the existing customers will not fall within such an ‘unrelated category’. Unless the target market gets attracted till the nerves, changes might prevail only in ‘liabilities’ in balance sheets. The cordial balance between the weaker diversification and the unrelated diversification should be constructed by adjusting the market intelligence will create success stories.

Better diversify your thoughts and refine it to max, before taking ‘diversification’ aerial routes.

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