home » Calculation » What is meant by a diversified growth strategy. Diversified growth and determination of the optimal company size

What is meant by a diversified growth strategy. Diversified growth and determination of the optimal company size

A group of goods that are closely related due to the similarity of their functioning, or intended for the same categories of consumers, or sold within a certain price range is _____.

List the stages of new product development.


	Select... Prototyping Business Analysis Marketing Testing Idea Evaluation Commercialization Idea Generation
5.	Select... Prototyping Business Analysis Marketing Testing Idea Evaluation Commercialization Idea Generation
	Select... Prototyping Business Analysis Marketing Testing Idea Evaluation Commercialization Idea Generation
	Select... Prototyping Business Analysis Marketing Testing Idea Evaluation Commercialization Idea Generation
6.	Select... Prototyping Business Analysis Marketing Testing Idea Evaluation Commercialization Idea Generation

A strategy in which only one intermediary has the right to sell a product is called a strategy ...

Choose one answer.

A strategy in which only one intermediary has the right to sell a product is called a _____ marketing strategy.

A product range is considered narrow if...

Choose one answer.

The characteristics of the commodity nomenclature are:

Choose the correct answer options:

For goods daily demand suitable marketing strategy _____

Establish a correspondence between the concept and their content

Changing the assortment group by varying the product means ...

Choose one answer.

Production Association produces various goods for many consumers: bakery products, cakes, cookies of several kinds. "Cakes" in this case can be interpreted as ...

Choose one answer.

Question12

Points: 1

The search for new products that are "consonant" with the ones in the assortment is called a strategy ...

Choose one answer.

Question13

Points: 1

In marketing, the saturation of the product range is called ...

Choose one answer.

Question14

Points: 1

Fit for possible solutions firms by assortment names accepted in marketing theory

Question15

Points: 1

_____, as a set of all products of the company, is characterized by length, breadth, depth, harmony.

Answer:

Question16

Points: 1

_____ reflects the degree of proximity of the various lines in terms of the end use of the product.

Answer:

Question17

Points: 1

Creating assortment groups is an example...

Choose one answer.

3. creating a new product to replace the old version of the product

4. all answers are correct

5. there is no correct answer

2. Is it advisable to create a product modification based on improving its quality?

1. in the presence of technology that improves the quality of the goods

2. if there are resources for R&D

3. subject to market research results

4. if there are quality parameters, the improvement of which the consumer can evaluate as positive changes

5. there is no correct answer

3. The cream skimming strategy implies:

A) the use of high prices for a new product that is of high quality or uniqueness;

b) the use of different prices for different market segments/countries for the same product;

c) fast penetration international market due to low prices;

d) an aggressive promotion policy.

Price skimming is setting a high price in an environment where the market is insensitive to price levels and price changes. Price skimming can make sense when lowering the price results in less revenue.With a cream skimming strategy, high prices are set early in the product life cycle and thenNew Product is displayed in market segments characterized by the lowest price elasticity of demand.

4. " New product little known to the buyer, usually located at the stage of the product life cycle ... implementation

5. In marketing practice, primary information should be collected for the following purposes…

a study of consumer reaction to a new product

in the study of consumer behavior during sales promotion activities

d study of the general economic situation

6. A demarketing business may take actions…

but transfers know-how to other manufacturers, but using the brand of his company

Product life cycle level

Product life cycles in selected countries

The main factors that determine the life cycle of a product

Global Product Life Cycle

Synchronized access to foreign markets

Consistent access to foreign markets

Possibilities of using the concept of the global product life cycle

Limitation of the concept of product life cycle

The main functions of packaging in foreign markets

Factors influencing the packaging of goods in foreign markets

Packing size

Package design

Legal requirements

Packaging cost

Product recognition

Product perception

Product labeling

Basic marking functions

Labels and tags as the main label carriers

Requirements for labeling goods in EU countries.

International agreements on packaging and labeling of goods

Eco label

Bar code

European Commodity Numbering Association

EAN barcode structure

Basic barcode functions
Test for a quick survey
Test taskfor the first topic of the report:

1. At what phase of the product life cycle does the company receive the maximum profit:

in the recession phase;

in the growth phase;

in the maturity phase.

2. What stage of the product life cycle is characterized by persuasive international advertising and profit growth?

3. stage of maturity;

4. decline stage.

The growth stage is a period of rapid acceptance of the product by the market, rapid growth sales and profits.

3. At what stage in the international life cycle of a product does sales slow down and modification efforts are required?

1. recession;

2. introduction;

3. maturity;

Stage recession - final stage vital cycle goods, characterized by a sharp decrease in salesand then profits.

4. In practice marketing communications Depending on the goals of advertising at various stages of the product life cycle, the following types of advertising are distinguished ...

2. informative;

3. reminiscent ;

Depending on the stage vital cycle goods allocate informative , persuasive and reminiscent advertising . Informative advertising prevails at the stage of product introduction to the market, when the task is to form primary demand. It consists in market information about a product or its new application, aims to dispel consumer fears, carries information about price changes. Reminder advertising is important at the maturity stage of the product life cycle, when most potential buyers have already purchased the product. It is used to force the consumer to remember the product, to maintain awareness of it at a high level.

5. At what stage of the international life cycle of a product does demand form?

1. introduction;

3. height;

4. maturity.

growth phase. If the product is required in the market, then sales will begin to grow significantly. At this stage, there is usually an acceptance of the goods by buyers and a rapid increase in demand for it. Market coverage is increasing. Information about the new product is transferred to new customers.

6. What is the stage of the life cycle product is characterized by informative international advertising and demand generation?

implementation stage;

stage of maturity;

decline stage.

Test task for the second topic of the report:

1. Global marketing products include…

carbonated drinks;

spare parts for the car "Zhiguli";

carbonated drinks "Pinocchio"

Global marketing is the marketing of global organizations that conduct their production and marketing activities, considering the whole world as one big market, in which its regional and national differences do not play a decisive role. This includes Sosa-Sola carbonated drinks, as these products are consumed all over the world.

2. What is the stage of the life cyclethe product is characterized by admonition solid international advertisingmine and profit growth?

growth stage;

implementation stage;

stage of maturity;

decline stage.

3. What is the stage of the life cycle product is characterized by reminiscent international advertising and the need to modify the product?

implementation stage;

stage of maturity;

decline stage.

4. What is the stage of the life cycle product is characterized by a decrease in sales volumes and the need to the scope of market modification?

implementation stage;

recession stage;

stage of maturity.

5. What kind of modification can be in the stage of maturity product cycle?

Konku modification

plan modification;

market modification;

4. personality modification

6. At what stage in the international life cycle of a product does sales slow down and modification efforts are required?

implementation;

maturity;

height.

7. It does not contribute to the extension of the product life cycle ...

identifying new consumer groups and increasing the targeting of products

product modification

8. The firm, as a rule, receives the maximum profit at the stage of the product life cycle ...

implementation

growth

Test task for the third topic of the report:

1. From a dictionary.Blister packaging- packaging made of thermoplastic materials. Typically, blister packaging repeats the volumetric shape of an item or product.

outer packaging- a set of protective measures and material means to prepare the goods for transportation and storage, to ensure its maximum safety and make it transportable.

Package – Container, the material in which the goods are placed. It is intended to preserve the properties of the product after its manufacture, as well as to make the cargo compact for ease of transportation.

D) design.

3. What are the most important elements to consider when planning export packaging?

And the size of the package and its design;

B local customs regarding the color of the package, the level of education of the consumer;

The material from which the package is made and its weight.
Test task for the fourth topic of the report:

1. "Environmental" labeling of goods in an EU country takes into account:

A) the level of water pollution;

B) the presence of noise;

C) the amount of energy consumed;

D) degree of air pollution;

D) All answers are correct.

2. Important psychological factor affecting buyers and consumers foreign goods, is:

A) packaging and labeling of goods;

B) the presence of a well-known trademark;

C) providing additional guarantees:

D) the country of origin of the goods;

D) design.

Task 5. All speakers of the abstract are additionally tested for knowledge of terms and definitions from the dictionary of the study guide "International Marketing" (20 definitions)
PRACTICAL LESSON No. 12 (2 hours) TOPIC:. BRANDING AS A COMPONENT PART OF COMMODITY POLICY
Topics of planned individual reports:

Product Manufacturing Decisions

Product adaptation

Creating a new product

Issues for discussion on the conceptual apparatus of the topic and essay topics:

Major decisions on the use of a trademark in foreign markets

No trademark

Presence of a trade mark of the manufacturer

Use of trademarks

Trademark Plurality

Single Trademark

Local and global trademark

Legal protection of a trademark

Warning label

Form style

Corporate identity objects

Basic elements of corporate identity

Corporate identity as a form of communication

Service in commodity policy

Test for a quick survey

Test taskfor the first topic of the report:

From the dictionary. The most valuable characteristic of a product for the enterprise and for the consumer is ... product quality. The company sells vegetables and does not plan to use the brand name, because ... product quality is not constant

1. In marketing theory, the concept of "product quality", as an indicator of competitiveness, will characterize ...

and the number of consumers who bought the product

b the totality of the properties of the product, which he receives in the process of packaging

the ability of the product to meet the requirements of the buyer

d set of product properties that determine its ability to satisfy specific consumer needs

2. The most valuable characteristic of the product for the enterprise and for the consumer is ...

a) product quality

b) trade mark

c) market novelty

d) minimum price

3. The pricing method, when the company deliberately overprices, emphasizingquality and feature of the item, is the method…

a) prestigious prices

b) imputed consumer rating

c) following the leader of the competition

d) price discrimination

4. Sale of goods by high prices and in terms of market segments that pay special attention toquality product, trademark implies a strategy ...

a) prestigious prices

b) "cream skimming"

c) "price leader"

d) selective penetration

Types of diversification in economic activity can be classified in two directions: diversification of the investment portfolio and diversification of business areas (activity and production). This paper discusses the diversification of activities and production.

Vikhansky named the following as the main strategies for diversified growth:

2) a strategy of centered diversification;

3) horizontal diversification strategy;

4) strategy of conglomerate diversification.

Soitina-Kutishcheva Yu.N. offers a classification of types of diversification according to three criteria: direction, industry affiliation, country affiliation. The classification is clearly shown in Figure 1.

Figure 1 - Classification of types of diversification

The following types of diversification in its direction have been identified:

vertical diversification. It provides for the development of new products, for the production of which traditional products are used as raw materials or semi-finished products, or the production of goods that are raw materials or semi-finished products that are components in the manufacture of traditional products. This type of diversification is associated with the creation of technological chains "extraction and processing of raw materials - production of an intermediate product - production of a product with high consumer properties - marketing" both in full and in an abridged version with the absence of any links;

horizontal diversification. In this case, a new product is created on the basis of existing or new technologies within the main profile of the company, product distribution channels are expanding;

conglomerate diversification. In this case, the growth of the company is carried out through the production of products that are completely unrelated to its traditional products;

Cross diversification. Manifested in a combination of horizontal and vertical diversification;

mixed diversification. Manifested in a combination of horizontal, vertical, conglomerate diversification.

By industry, we suggest highlighting:

Mono-industry diversification - diversification of the company within one industry;

Polyindustry - related diversification - diversification within several industries associated with traditional types of products;

Polyindustry - unrelated diversification - diversification within several industries, not related to traditional types of products.

A.A. Thompson, Jr. A.J. Strickland distinguishes the following types of diversification strategies:

1. The strategy of centered (concentric) diversification is based on the search for and use of additional opportunities for the production of new products that are contained in the existing business. That is, the existing production remains at the center of the business, and the new one arises based on the opportunities that are contained in the developed market, the technology used, or in other strengths the functioning of the firm. Such capabilities, for example, may be the capabilities of the specialized distribution system used;

2. Horizontal diversification strategy focused on the traditional consumer. In this case, a new product is created that requires new technologies, which is focused on the consumer of the main product.

3. Vertical diversification strategy (development of new products, using traditional products as raw materials or semi-finished products, or production of goods that are raw materials, semi-finished products or components in the manufacture of traditional products. This type diversification is not always highlighted.)

4. Strategy of conglomerate or lateral diversification. In this case, the growth of the firm is due to the production of products that are completely unrelated to traditional products firms.

Taking into account the modern globalization of the world economy, it is considered natural to diversify the organization both within one country and outside it, which is reflected in the allocation of types of diversification by country.

Common goals for all areas of diversification are: the ability to consolidate investment resources; reducing the risks of uncertainty in the external environment; the desire to ensure social and economic stability, survivability, crisis prevention, preserve regional sectoral complexes; more full use all types of resources; obtaining a synergistic effect due to the growth of market potential; reduction of transaction costs; personal motives of managers; improving the business image.

Goals specific to vertical diversification: securing raw material sources; the desire to obtain strategic advantages in sales or supply, to achieve stability and consistency of relations; reduction of risks of non-sale of products, non-delivery of raw materials; reduced need for working capital; preservation of unique technological complexes.

Goals characteristic of horizontal diversification: protection from competition, increase in market share, reduction of costs for development, production and promotion of products; the ability to switch to a product that is in demand; combining complementary resources, using surplus fixed assets; load increase production systems; alternative options for the use of raw materials, materials, technologies.

Goals specific to conglomerate diversification: the ability to switch to a commodity that is in demand; the possibility of reducing the need for working capital, the transition to internal settlement; alternative options for the use of raw materials, materials, technologies.

Thus, after analyzing the works of the above authors, we can conclude that most of the authors are similar in the classification of the diversification strategy. Mainly horizontal, vertical and conglomerate strategies of diversification stand out. Some authors add mixed, cross, concentric differentiations to the classification. Diversification is also considered depending on industry and country affiliation.

The main strategies for diversified growth are as follows:

The strategy of centered diversification is based on finding and using additional opportunities for the production of new products that are contained in the existing business. That is, the existing production remains at the center of the business, and the new one arises based on the opportunities that are contained in the developed market, the technology used, or in other strengths of the firm's functioning. Such capabilities, for example, may be the capabilities of the specialized distribution system used.

The horizontal diversification strategy involves looking for growth opportunities in an existing market through new products that require new technology different from the one used. With this strategy, the firm should focus on the production of such technologically unrelated products that would use the already existing capabilities of the firm, for example, in the field of supply. Since the new product must be oriented to the consumer of the main product, it must be related in its qualities to the already produced product.

An important condition for the implementation of this strategy is a preliminary assessment by the company of its own competence in the production of a new product.

The strategy of conglomerate diversification is that the company expands by producing technologically unrelated new products that are sold in new markets. This is one of the most difficult development strategies to implement, since its successful implementation depends on many factors, in particular, on the competence of the existing staff and especially managers, seasonality in the life of the market, the availability of the necessary amounts of money, etc.

As a result, we can conclude that in real practice, a firm can simultaneously implement several strategies. This is especially true for multi-industry companies. The firm can also pursue a certain sequence in the implementation of strategies. In such cases, the firm is said to be pursuing a combined strategy.

Diversification can be concentric or conglomerate:

Concentric diversification occurs when an enterprise acquires another enterprise that produces products similar to existing ones. Enterprises wishing to diversify concentrically by external means will look for organizations that are strongly associated with it in terms of market, technology and resource requirements. However, there is a possibility here that existing weaknesses or previous weak solutions can be hidden. The financial benefits of concentric diversification usually appear over the medium to long term. There is a good opportunity for financial synergy here, ie. when the total result is greater than the sum of the results from two certain types activities.

Conglomerate diversification occurs when an enterprise acquires another enterprise that produces products that have no connection with existing products and markets (for example, a firm that develops computer programs). Conglomerate diversification can provide significant financial synergies - in the form of tax incentives, greater opportunities for employee training, better use of financial resources.

This strategy is generally regarded as having a significant level of risk, as the enterprise may have little experience in new technology or new markets and may not have the managerial skills to effectively lead the new enterprise. Directions in which diversification can occur in the field of markets and technology.

The advantages of conglomerate diversification are that it can help the enterprise survive for an extended period of time; provides the enterprise with the opportunity to expand the range of products (services); can provide financial synergy; can serve efficient use excess resources.

The disadvantages of conglomerate diversification is that diversification on a large scale is necessary for success; workers may not have sufficient knowledge and experience to effectively manage the production of a new product; significant investment in new technology may be required; this is an incremental strategy - it takes a certain amount of time to make a profit.

Course work

by subject

"Strategic Management"

"Types of Diversified Growth Strategies"

Moscow 2010

Introduction

The dynamism of development and the globalization of the modern world economy have necessitated diversification as a way to reduce the risks of uncertainty in the external environment and increase the competitiveness of companies.

The diversification of companies was most developed in the mid-1950s. This was facilitated by the falling rate of return on capital invested in traditional production. In the United States and a number of other countries, the diversification process has been accelerated by the adoption of antitrust laws. Traditionally, Japanese and Japanese companies are widely diversified. South Korea, which is primarily due to the need to conquer foreign markets.

Diversification is undertaken by companies from different industries. The greatest degree of diversification was achieved by the concerns of Germany and Japan, which belong to the type of diversified companies, mainly metallurgical ones. As priority areas for diversification, they chose mechanical engineering and engineering services.

Since the mid-90s of the last century, the process of diversification has intensified Russian companies ferrous metallurgy. The reason for this was the change in the global situation in terms of increased demand and prices for metal products, which, in turn, led to an improvement in the economic situation of metallurgical enterprises and an increase in their profits. As a result, Russia is beginning to create large industrial structures with varying degrees of diversification.

Currently, the diversification of Russian companies is complicated by the lack of an effective system of measures state regulation this process.

The application of diversification in practice is ahead of theoretical developments on this issue. There is no holistic and justified mechanism for the development of companies based on diversification, coordinated with the processes of reform and restructuring of industry at the state level. Theoretical and methodological apparatus associated with the assessment of the feasibility of diversification and indicators that provide choice best options, is extremely poorly developed and needs further elaboration.

The relevance of studying the types of diversified growth strategies is determined by the fact that the diversification strategy is today a factor in increasing the efficiency of an organization as a result of its competitiveness.

When characterizing the degree of scientific development of the types of strategies for diversified growth, it should be taken into account that this topic has already been analyzed by various authors in various publications: textbooks, monographs, periodicals and on the Internet. Nevertheless, the analysis of the literature showed the fragmentation and fragmentation of the conceptual apparatus of diversification, the lack of a holistic approach to its definition.

The scientific significance of this work lies in the optimization and streamlining of the existing scientific and methodological base on the issues under study - another independent author's study. The practical significance of the topic "Types of strategies for diversified growth" consists in the analysis of problems in both time and space sections.

The object of study of this work is the types of diversified growth strategies.

The subject of the study is particular issues of diversified growth strategies.

The purpose of this work is to form the basis for the adoption of corporate strategic decisions that create rather than destroy company value.

Tasks. To achieve this goal, several tasks must be solved:

.identify the specifics of the diversification strategy;

.consider the types of diversification strategies and their scope;

.determine the relative merits of diversification and strategic alliances in terms of leveraging the relationships between different businesses.

This course work consists of an introduction, four chapters, a conclusion and a bibliography.

The first chapter explains what strategy is and explores its role in the success of an organization and people. It introduces the basic concepts and definitions with which strategic management operates.

The second chapter examines the essence of the diversification strategy itself, gives the basic concepts related to this issue, and also examines the factors that are the basis for the application of this strategy to analyze decisions regarding diversification.

Chapter Three deals with the types of diversified growth strategies.

The fourth chapter highlights the advantages and disadvantages of a diversification strategy.

strategy organization diversification growth

1. Theoretical foundations strategic development enterprises

An enterprise is a production unit, which is an integral organism, consisting of several functional subsystems. The efficiency of the enterprise as a whole depends on the quality of the work of these subsystems. Strategic planning is of fundamental importance.

1.1 Strategy - concept and definitions

Strategy - an integrated model of actions designed to achieve the goals of the enterprise. The content of the strategy is a set of decision rules used to determine the main directions of activity.

There are two opposing views on the understanding of strategy in the literature. In the first case, strategy is a specific long-term plan to achieve some goal, and strategy development is the process of finding some goal and drawing up a long-term plan. This approach is based on the fact that all emerging changes are predictable, the processes occurring in the environment are deterministic and can be fully controlled and managed.

In the second case, the strategy is understood as a long-term qualitatively defined direction of the development of the enterprise, relating to the scope, means and form of its activities, the system of intra-production relations, as well as the positions of the enterprise in environment. With this understanding, the strategy can be described as a chosen direction of activity, the functioning and within which should lead the organization to achieve its goals.

In business life, strategy refers to the overall concept of how an organization achieves its goals, solves its problems, and allocates the limited resources needed to do so. Such a concept (corresponding to the strategy of the second type) includes several elements. First of all, they include a system of goals, including the mission, corporate and specific goals. Another element of the strategy is a policy, or a set of specific rules for organizational actions aimed at achieving the set goals.

Usually, a strategy is developed for several years ahead, specified in various projects, programs, practical actions, and implemented in the process of their implementation. Significant expenditure of labor and time of many people required to create an enterprise strategy does not allow it to be changed often or seriously adjusted. Therefore, it is formulated in rather general terms. This is the intended strategy.

At the same time, both inside and outside the organization, new unforeseen circumstances appear that do not fit into the original concept of the strategy. They can, for example, open up new development prospects and opportunities for improving the existing state of affairs, or, conversely, force the abandonment of a proposed policy and plan of action. In the latter case, the original strategy becomes unrealizable and the enterprise proceeds to the consideration and formulation of urgent strategic tasks.

Main distinctive features strategies were identified by I. Ansoff in his book “ Strategic Management", 1989:

1.The strategizing process does not end with any immediate action. It usually ends with the establishment of general directions, the promotion of which will ensure the growth and strengthening of the company's position.

2.The formulated strategy should be used to develop strategic projects using the search method. The role of strategy in search is, first, to help focus attention on certain areas and opportunities; second, to discard all other possibilities as incompatible with the strategy.

.The need for a strategy disappears as soon as the real course of development will lead the organization to the desired events.

.While formulating a strategy, it is not possible to foresee all the possibilities that will open up when drafting specific activities. Therefore, one has to use highly generalized, incomplete and inaccurate information about various alternatives.

.As the search process uncovers specific alternatives, more accurate information emerges. However, it may call into question the validity of the original strategic choice. Therefore, the successful use of the strategy is impossible without feedback.

.Since both strategies and benchmarks are used to select projects, it might seem that they are one and the same. But these are different things. The benchmark is the goal that the company is trying to achieve, and the strategy is the means to achieve the goal. Landmarks are more high level decision making. A strategy that is justified under one set of benchmarks will not be justified if the organization's benchmarks change.

.Finally, strategy and guidelines are interchangeable both at individual moments and at different levels of the organization. Some performance parameters (for example, market share) may serve as benchmarks for the firm at one moment, and become its strategy at another. Further, since guidelines and strategies are developed within the organization, a typical hierarchy arises: what is at the top levels of management are elements of the strategy, at the lower turns into guidelines.

1.2 Reference development strategies

The most common, verified by practice and widely covered in the literature, business development strategies are usually called basic, or reference. According to Kotler, they reflect four different approaches to the growth of the company and are associated with a change in the state of one or more of the following elements: product, market, industry, position of the company within the industry, technology. Each of these five elements can be in one of two states: an existing state or a new state.

The first group of benchmark strategies are the so-called concentrated growth strategies. This includes those strategies that are related to product and market change and do not affect the other three elements. In the case of following these strategies, the company is trying to improve its product or start producing a new one without changing the industry, as for the market, the company is looking for opportunities to improve its position in the existing market or to switch to new market.

The second group of reference strategies are those business strategies that involve the expansion of the firm by adding new structures. These strategies are called integrated growth strategies. Usually, a firm can resort to implementing such strategies if it is in a strong business, cannot implement concentrated growth strategies, and at the same time, integrated growth does not contradict its long-term goals. A firm can pursue integrated growth, both through acquisition of ownership and through expansion from within. In both cases, there is a change in the position of the firm within the industry.

The third group of reference business development strategies are diversified growth strategies. These strategies are implemented if firms can no longer develop in a given market with a given product within a given industry.

The fourth type of reference business development strategies are reduction strategies. These strategies are implemented when the firm needs to regroup forces after a long period of growth or due to the need to improve efficiency when there are recessions and cardinal changes in the economy, such as, for example, structural adjustment, etc. In these cases, firms resort to targeted and planned downsizing strategies. The implementation of these strategies is often not painless for the company. However, it must be clearly understood that these are the same strategies for the development of the company as the growth strategies discussed, and under certain circumstances they cannot be avoided. Moreover, in certain circumstances, these are the only possible strategies for business renewal, since in the vast majority of cases, renewal and general acceleration are mutually exclusive business development processes.

1.3 Classification of strategies

The variety of strategies used in strategic management makes it very difficult to classify them. Among the classification features, the most significant are the following:

· decision-making level;

· basic concept achieving competitive advantages;

· industry life cycle stage;

· the relative strength of the organization's industry position;

· the degree of "aggressiveness" of the organization's behavior in the competition.

For example, the classification of enterprise strategies according to the level of decision making is as follows:

corporate;

business;

functional;

· operational (the latter can be included in the functional).

A complicating factor in the classification of strategies is that most strategies cannot be uniquely identified by one of the features. So, Zabelin P.V. and Moiseeva N.K. They propose to classify strategies in only three ways:

· belonging to the five fundamental strategies for achieving competitive advantages (global strategies);

· belonging to the strategies of portfolio management of business areas (portfolio strategies);

· belonging to the strategies applied depending on external and internal conditions(functional).

2. The essence of the diversification strategy

The answer to the question: “What kind of business should we go into?” is the starting point of the strategy and the foundation of the firm's identity. Many companies use the mission statement as a means to openly state their identity. Over time, a company's understanding of the scope of its business may change. Corporate strategic decisions can be the foundation by which a company is able to overcome the constraints imposed by life cycle industry, and achieve long-term growth and prosperity. On the other hand, misunderstood corporate strategies can destroy jobs and invested capital at an alarming rate.

Thus, when making diversification decisions, firms answer questions such as:

How attractive is the industry to enter?

Can the firm set competitive advantage in a new industry?

2.1 Management levels

Diversification (from lat. Diversificatio - change, diversity) is the distribution economic activity to new areas (expansion of the range of manufactured products, types of services provided, geographical scope of activity, etc.). In the narrow sense of the word, diversification refers to the penetration of enterprises into industries that do not have a direct industrial connection or functional dependence on their main activity. As a result of diversification, enterprises turn into complex diversified complexes, or conglomerates.

The strategy is needed by the company as a whole, each line of activity within it and each functional unit of each direction.

In diversified enterprises, strategies are formed at four separate organizational levels. The first level - corporate - is present in companies operating in several business areas. Here decisions are made on purchases, sales, liquidations, re-profiling of certain business areas, strategic correspondences between individual business areas are calculated, diversification plans are developed, and global management of financial resources is carried out. Corporate strategy is a general management plan for a diversified enterprise and applies to the entire enterprise, covering all areas of activity in which it is engaged. It consists of actions taken to assert one's position in various industries.

Corporate strategy is created by top managers. They have the primary responsibility for reviewing messages and recommendations from lower-level managers. Heads of key industries can also participate in the development of a strategy if its individual areas are relevant to the production they lead.

The second level - business areas - the level of the first leaders of non-diversified organizations, or completely independent, responsible for developing and implementing the strategy of the business area. At this level, a strategy is developed and implemented based on the corporate strategic plan, the main purpose of which is to increase the competitiveness of the organization and its competitive potential.

Business strategy (business strategy) stands for management plan separate area activities of the enterprise and includes a number of approaches and directions developed by management in order to achieve the best performance in a particular area of activity. For an individual enterprise engaged in one type of business, corporate and business strategies are the same; the difference between these strategies exists only in a diversified enterprise. Directions of business strategy:

-response to changes taking place in the industry, in the economy as a whole, in politics and other significant areas;

-development of competitive measures and actions, market approaches, which can give a lasting advantage over competitors;

-consolidation of strategic initiatives of functional departments;

-solving specific strategic problems that are relevant at the moment.

The third - functional - level of heads of functional areas: finance, marketing, R&D, production, personnel management, etc. Functional strategy - a management plan of action for a separate division or a key functional area within a particular business area. The functional strategy, although narrower than the business strategy, specifies individual details in general plan development of the enterprise by identifying approaches, necessary actions and practical steps to ensure the management of individual divisions or business functions.

The fourth - linear - the level of heads of departments of the organization or its geographically remote parts, for example, representative offices, branches. Operational strategy is a management plan for key organizational units. It provides for the implementation of strategically important operational tasks, such as: the purchase of raw materials, transportation, and promotional activities. Responsibility for developing operational strategies lies with middle and lower level managers.

An undiversified organization has, respectively, three levels of strategies. This continues until attempts to diversify into other areas are taken into account.

Thus, development strategy development is carried out at all levels of management. This increases its efficiency and the efficiency of the enterprise as a whole.

2.2 Reasons for diversification

Diversification is based on three main goals: growth, risk reduction and profitability.

Height. In firms in end-of-life industries, the reluctance of managers to downsize the firm makes firm diversification particularly attractive. The propensity of managers to seek growth at the expense of profits is one aspect of the agency problem (high bonuses paid executive directors, make those manipulate financial reporting rather than aiming for long-term profitability).

The ability of top managers to pursue goals other than profitability is limited by two main factors. First, over a long period, the firm must generate a return on invested capital in excess of the costs incurred, otherwise it will not be able to raise the capital needed to replace assets. Second, if managers sacrifice profitability for other purposes, they risk losing their jobs, either through shareholder protests or as a result of their firm being taken over by another. This explains why companies sell their diversified businesses when their independence is threatened by a controlling bid or a drop in profitability that attracts potential predators.

Risk reduction. The second motive for diversification is the desire to distribute risk. To isolate the impact of diversification on risk, it is very useful to take into account "pure" or "conglomerate" diversification, in which individual businesses are owned by the same owner, but because they are not related to each other, their individual cash flows remain unchanged. While cash flows various businesses not fully correlated, the differences between cash flows combined businesses is smaller than the average flow differences between individual businesses. Thus, diversification reduces risk.

Profitability. For firms considering diversification, Michael Porter suggests three "vital tests" to consider when deciding whether to create shareholder value through diversification:

1.Industry Attractiveness Test. The industries chosen for diversification must be structurally attractive or have the ability to become so.

2.Test for entry costs. The cost of organizing a new production should not absorb all future profits.

.Wealth Increment Test. Either the new business unit must gain a competitive advantage through its association with the corporation, or the corporation through its association with the business unit.

2.3 Applications of the diversification strategy

Consider the scope of the diversification strategy.

Diversification strategies are one of the most common business development strategies. These strategies are implemented when the firm can no longer develop in a given market with a given product within a given industry. The main factors determining the choice of a diversified growth strategy are formulated:

?markets for the business being carried out are in a state of saturation or a decrease in demand for the product due to the fact that the product is at the stage of dying;

?the current business gives an inflow of money that exceeds the needs, which can be profitably invested in other areas of the business;

?new business can create synergies, for example through better use of equipment, components, raw materials, etc.;

?antitrust regulation does not allow further expansion of business within the industry;

?tax losses can be reduced;

?access to world markets can be facilitated;

?new qualified employees can be attracted or the potential of existing managers can be better used.

3. Types of Diversified Growth Strategies

Types of diversification in economic activity can be classified in two areas: diversification of the investment portfolio and diversification of business areas (activity and production). This paper discusses the diversification of activities and production.

Vikhansky named the following as the main strategies for diversified growth:

2)centered diversification strategy;

3)horizontal diversification strategy;

)conglomerate diversification strategy.

Figure 1 - Classification of types of diversification

The following types of diversification in its direction have been identified:

horizontal diversification. In this case, a new product is created on the basis of existing or new technologies within the main profile of the company, product distribution channels are expanding;

conglomerate diversification. In this case, the growth of the company is carried out through the production of products that are completely unrelated to its traditional products;

cross diversification. Manifested in a combination of horizontal and vertical diversification;

mixed diversification. Manifested in a combination of horizontal, vertical, conglomerate diversification.

By industry, we suggest highlighting:

?mono-industry diversification - diversification of the company within one industry;

?polysectoral - related diversification - diversification within several industries associated with traditional types of products;

?multi-industry - unrelated diversification - diversification within several industries, not related to traditional types of products.

A.A. Thompson, Jr. A.J. Strickland distinguishes the following types of diversification strategies:

1.The strategy of centered (concentric) diversification is based on the search for and use of additional opportunities for the production of new products that are contained in the existing business. That is, the existing production remains at the center of the business, and the new one arises based on the opportunities that are contained in the developed market, the technology used, or in other strengths of the firm's functioning. Such capabilities, for example, may be the capabilities of the specialized distribution system used;

2.Horizontal diversification strategy focused on the traditional consumer. In this case, a new product is created that requires new technologies, which is focused on the consumer of the main product.

3.Vertical diversification strategy (development of new products, using traditional products as raw materials or semi-finished products, or production of goods that are raw materials, semi-finished products or components in the manufacture of traditional products. This type of diversification is not always distinguished.)

.The strategy of conglomerate or lateral diversification. In this case, the growth of the firm is carried out by producing products that are completely unrelated to the traditional products of the firm.

Common goals for all areas of diversification are: the ability to consolidate investment resources; reducing the risks of uncertainty in the external environment; the desire to ensure social and economic stability, survivability, crisis prevention, preserve regional sectoral complexes; better use of all types of resources; obtaining a synergistic effect due to the growth of market potential; reduction of transaction costs; personal motives of managers; improving the business image.

Goals specific to vertical diversification: securing raw material sources; the desire to obtain strategic advantages in sales or supply, to achieve stability and consistency of relations; reduction of risks of non-sale of products, non-delivery of raw materials; reducing the need for working capital; preservation of unique technological complexes.

Goals characteristic of horizontal diversification: protection from competition, increase in market share, reduction of costs for development, production and promotion of products; the ability to switch to a product that is in demand; combining complementary resources, using surplus fixed assets; increase in loading of industrial systems; alternative options for the use of raw materials, materials, technologies.

The main strategies for diversified growth are as follows:

the strategy of centered diversification is based on finding and using additional opportunities for the production of new products that are contained in the existing business. That is, the existing production remains at the center of the business, and the new one arises based on the opportunities that are contained in the developed market, the technology used, or in other strengths of the firm's functioning. Such capabilities, for example, may be the capabilities of the specialized distribution system used.

a horizontal diversification strategy involves looking for growth opportunities in an existing market through new products that require a new technology that is different from the one being used. With this strategy, the firm should focus on the production of such technologically unrelated products that would use the already existing capabilities of the firm, for example, in the field of supply. Since the new product must be oriented to the consumer of the main product, it must be related in its qualities to the already produced product.

An important condition for the implementation of this strategy is a preliminary assessment by the company of its own competence in the production of a new product.

conglomerate diversification strategy is that the firm expands by producing technologically unrelated new products that are sold in new markets. This is one of the most difficult development strategies to implement, since its successful implementation depends on many factors, in particular, on the competence of the existing staff and especially managers, seasonality in the life of the market, the availability of the necessary amounts of money, etc.

Diversification can be concentric or conglomerate:

Concentric diversification occurs when an enterprise acquires another enterprise that produces products similar to existing ones. Enterprises wishing to diversify concentrically by external means will look for organizations that are strongly associated with it in terms of market, technology and resource requirements. However, there is a possibility here that existing weaknesses or previous weak solutions can be hidden. The financial benefits of concentric diversification usually appear over the medium to long term. There is a good opportunity for financial synergy here, ie. when the total result exceeds the sum of the results from two separate activities.

4. Advantages and disadvantages of a diversification strategy

External Strategies usually implemented through acquisitions, mergers, joint ventures or mergers with enterprises at the beginning or end of the enterprise's value chain. This chain covers processes from raw material suppliers to end users.

External growth may include activities that are directly related or even not related to existing technologies, markets. The main challenges behind these various firms are to increase market share and to achieve financial synergies.

Diversification in general can be called an expansion of the existing scale of the enterprise in terms of product and market. It should be noted that diversification and acquisition are not synonymous. Acquisition may not lead to diversification, and diversification may be achieved through internal development.

The enterprise can diversify internally by creating products / services that are technologically similar to those available; by creating products / services that are completely different from existing ones, but which can attract existing buyers.

The reasons for the transition of the enterprise to internal diversification can be different:

1)new products may have cyclical sales patterns that balance the cyclical sales of existing products of the enterprise;

2)existing distribution channels of the enterprise can also be used to sell new products to existing customers;

)by adding new products to existing products, resulting in increased profits;

)diversification may be necessary due to the fact that the company operates in a highly competitive and not growing industry (for example, in the bakery), resulting in a low level of profit.

The reasons why a company considers it necessary to diversify externally may be the following:

?existing products and markets no longer meet the challenges of enterprise growth and profitability;

?the need to balance the enterprise with a high share borrowed money a non-leveraged enterprise in order to have a more balanced capital structure;

?the need to obtain resources that significantly improve the performance of an existing enterprise;

?the desire to distribute risk and balance the range of goods / services of the enterprise;

?the need for efficient use of available funds.

The advantages of diversification as a means of external growth is that it can be a good way out in a declining industry; it is a profit-oriented strategy; it helps to reduce dependency of scale and synergy; can greatly enhance market power enterprises in relation to buyers; can significantly increase the creditworthiness of the enterprise; can help distribute possible risk.

The disadvantages of diversification as a means of external growth are as follows:

1)a new activity may require new skills that are not currently available existing enterprise(for example, technological skills);

2)this strategy is better large enterprises;

)there may be uncertainty in the managerial aspect of diversification (for example, how two management teams will collaborate with each other);

)it is a high-risk strategy with long-term returns;

)requires significant reserves Money;

)there may be a tendency to transfer deficiencies from an existing enterprise to a new one.

Thus, the diversification strategy has a number of advantages over other strategies. First, this strategy can help an enterprise survive in a competitive market for its core business by shifting part of its assets to other enterprises. Secondly, the strategy can help to profitably invest excess resources in own enterprise.

The disadvantages of this strategy is the problematic managerial aspect of diversified enterprises. It is also worth remembering that the implementation of this strategy is carried out in the long term, so this will require additional costs from the company, which can pay off in the future. It also has the disadvantage that the diversification strategy may require new skills that the employees of the main enterprise do not possess.

Conclusion

Diversification can be justified either by the excellent post-industry profit potential that can be gained by entering the industry, or by the firm's ability to gain a competitive advantage in a new industry.

This term paper was to form the basis for making corporate strategic decisions that create, rather than destroy, company value. We have set a number of tasks to achieve this goal.

In the first chapter, we reviewed theoretical basis strategic development of the enterprise. The basic concepts of strategy, reference development strategies, and classification of strategies were given.

In the second chapter, the essence and types of the diversification strategy were revealed, as well as the grounds for its application, the scope of the diversification strategy.

Considering the diversification strategy, the main concepts related to this issue were defined, the classifications of various authors were considered.

We have analyzed a number of works of both Russian and foreign authors on marketing and strategic planning. From which we can conclude that most authors are similar in the classification of diversification strategies. Mainly horizontal, vertical and conglomerate strategies of diversification stand out. Some authors add mixed, cross, concentric differentiations to the classification. Diversification is also considered depending on industry and country affiliation.

In the course of the study, the areas of application of the diversification strategy were considered. We have found that the diversification strategy is one of the most common business development strategies. These strategies are implemented when the firm can no longer develop in a given market with a given product within a given industry. As a result, the main factors determining the choice of a diversified growth strategy were formulated.

It was revealed that the main strategies for diversified growth are the strategy of centered diversification based on the search and use of additional opportunities for the production of new products that are contained in the existing business; a horizontal diversification strategy that involves looking for growth opportunities in an existing market through new products that require a new technology that is different from the one used., as well as a conglomerate diversification strategy that consists in the fact that the company expands through the production of new products that are technologically unrelated to already produced new products that are sold in new markets.

Thus, in conclusion, it can be noted that each company chooses a more convenient type of strategy for itself, based on its goals and depending on the desired result. For some, this may be a strategy of one business, for others - one of the diversification strategies. The main thing is the achievement efficient operation, its profitability and achievement of the goals and objectives.

Bibliographic list

1.Arsenova M.V., Strizhenko A.A. Organizational approach to strategy in the age of information technology #"justify">. Bakirova G.F. Psychology of effective strategic personnel management: textbook. manual for university students studying in the specialties "Psychology", "Organization Management", "Personnel Management" / G.Kh. Bakirov. - M.: UNITI-DANA, 2008. - 591 p. - (Series "Magister");

3.Vikhansky O.S. Strategic Management: Textbook. - 2nd ed., revised. and additional - M.: Economist, 2004.;

.Grant R.M. Modern strategic analysis. 5th ed. / Per. from English. ed. V.N. Pound. - St. Petersburg: Peter, 2008. - 560 p.: ill. - (Series "Classic MBA");

.Daft R. Secrets of organizational success / R. Daft. - M.: Olma-press, 2007. - 569 p.;

.Business planning: Tutorial/ Ed. V.M. Popov. - M.: Finance and statistics. - 2007.;

.Dimitrieva Z.M. School of Management. The book of a practicing leader and business coach. - St. Petersburg: Speech, 2008. - 234 p.;

8.Ivanov M.A., Shusterman D.M. Organization as your tool: Russian mentality and business practice. - M., 2003.;

.Korotkov E.M. Crisis management, Publishing House "INFRA-M", 2007;

10.Kotler F. 300 Key Marketing Questions: answered by Philip Kotler / F. Kotler; per. from English. O. Litvinova. - M.: Olimp-Business, 2006. - 224 p.;

.Lisichkin V.A., Lisichkina M.V. Strategic management: Training and metodology complex. - M.: Ed. center EAOI.2007. - 329 p.;

.Maslova T.D. Marketing / Etc. Maslova, S.G. Bozhuk, L.N. Kovalik. - 3rd ed., revised. and additional - St. Petersburg: Peter, 2008. - 384 p.: ill.;

.Parakhina V.N. Strategic management: a textbook for students. universities. / V.N. Parakhina, L.S. Maksimenko, S.V. Panasenko. - 4th ed., stereotype. - M.: KNORUS, 2008. - 496 p.;

14.Porter E. Michael Competitive strategy: Methods of analysis of industries and competitors / Michael E. Porter; per. from English. - M.: Alpina Business Books, 2005. - 454 p.;

.Soitina-Kutishcheva Yu.N. Integration and diversification as ways to improve the sustainability of the enterprise / Yu.N. Soitina - Kutishcheva // Anti-crisis management: production and territorial aspects: tr. IV All-Russian. scientific - pract. conf. - Novokuznetsk 2005. - S. 107-111 .;

16.Solovieva Yu.N. Interaction marketing / Yu.N. Solovyov. - SPb.: Publishing House of SPbGUEiF, 2001. - 84 p.

17.Hanger D.D. Basics strategic management.: Per. from English. / D.D. Hanger, T.L. Whelen. - 4th ed. - M.: UNITI-DANA, 2008. - 319 p.

Tutoring

Need help learning a topic?

Our experts will advise or provide tutoring services on topics of interest to you.
Submit an application indicating the topic right now to find out about the possibility of obtaining a consultation.

The essence and features of diversification and diversified growth

Definition 1

Diversification is commonly understood as the distribution of invested or loaned money capital between various investment objects in order to minimize the risk of loss of capital and / or income from it. Simply put, diversification is the expansion of the company's areas of activity.

Diversification is based on the reorientation of sales markets, the expansion of the range of products, as well as the development of new types of production. Its main goal is to obtain economic benefits and strengthen the market position of the business. Among other things, diversification allows achieving a number of strategic advantages. In particular, we are talking O:

minimization of entrepreneurial risk;
changes in the company's economic portfolio towards its harmonization;
transition from stagnant industries to more profitable areas;
the ability to survive the crisis;
achieving a synergistic effect, etc.

It is believed that due to diversification, a business has the opportunity to abandon the principle of dominance of one product in production volumes and gradually identify new areas of activity that can bring potential strategic benefits. At the same time, diversification should not be given strategic priority until all other business growth opportunities have been exhausted. own sphere activities.

Diversified growth involves the development of business outside the area of its current activities. Through the use of a diversified growth strategy, companies can produce both an extensive range of their own or related industries, and enter completely new industries. In some cases, diversification involves the coverage by one business of the entire production cycle, from the extraction of resources to the release finished products and post-sales service. Depending on the nature of diversification, the basic types of diversified growth strategies are distinguished (Figure 1).

Figure 1. Classification of diversified growth strategies. Author24 - online exchange of student papers

Most often, diversified growth strategies are used in cases where the sectoral framework for the functioning of a business is narrowing, and companies, having exhausted opportunities for further growth in this industry, are looking for a new scope for their activities. They also take place when the company has the opportunity to more effectively use the potential at their disposal, occupying new, more attractive market niches.

Remark 1

Among other things, the use of a diversified growth strategy is considered justified in cases of a sharp deterioration in the underlying market conditions and a significant strengthening of the market positions of leading competitors, as a result of which there is a threat of ousting the company from the market.

Let's consider the main types of diversified growth strategies in more detail.

Main Types of Diversified Growth Strategies

So, diversification involves three possible variations of its implementation, which are reflected in the corresponding types of strategies.

The horizontal diversification strategy is based on expanding the current product range by adding new goods and services to it, which, despite the lack of connection with the current range, are of interest to consumers. In this case, the company begins to produce products of both its own and related industries.

An example of this type of strategy is the release by a cosmetic company specializing in foot creams of eye shadows, which are marketed under the same brand name.

The essence of horizontal diversification strategies is to find new growth opportunities for businesses through the promotion of new products to the existing market, the production of which requires the use of new technologies that are different from those already used. In this case, the company focuses on the production of technologically unrelated products that could use the capabilities of the company already available in certain industries (for example, in the field of supply). Being focused on the consumer of the main product, new products in terms of their qualities should be related to already produced goods and services.

The vertical diversification strategy relies on a business going beyond the existing industrial chain within which it operated and looking for new activities that would complement existing ones. Such an addition is possible in two variations:

in terms of technology;
commercially.

Vertical diversification strategies are based on replenishing the company's product range with those products that, from a marketing and/or technical point of view, are similar to existing products. Otherwise, strategies of this type are usually called strategies of concentric diversification. Their main goals are to achieve a synergy effect and expand the company's potential sales market.

The most striking example practical use vertical diversification strategies can be considered the production of individual automotive parts, carried out worldwide famous company General Electric.

The strategy of conglomerate (pure) diversification is based on business expansion through the release of new products, technologically and commercially not related to those already produced, and their implementation in new markets. This type of diversification strategy is considered one of the most difficult, since the success of their implementation is determined by a combination of many factors.

The basic motives for using a pure diversification strategy are shown in Figure 2.

Figure 2. Reasons for using conglomerate diversification strategies. Author24 - online exchange of student papers

An example of a pure diversification strategy is the acquisition by an automotive corporation small firm specializing in information technology and office equipment.

Thus, each type of diversified growth strategy has its own characteristics. The choice in favor of one or another type of strategic alternatives is determined on the basis of a deep analysis of the market, external and internal environment.

What is meant by a diversified growth strategy. Diversified growth and determination of the optimal company size

Tutoring

Main Types of Diversified Growth Strategies

Popular