This strategy is relevant for companies that have reached the ceiling in a particular industry. Further movement may include:
Centralized diversification without changing existing business processes and attracting investors' funds. This can be:
use of previously introduced technologies in the production of new goods;
creation of additional services based on existing ones;
offering consumers a new use for products already in production.
Horizontal diversification architect data package by introducing a fresh product to the market, aimed at consumers of the main one. This task is solved by:
expanding the product line with new items (for example, when a manufacturer of a popular clothing brand starts producing accessories);
offering alternative products that will appeal to the current audience (for example, a cookware company might start producing kitchen knives).
Conglomerate diversification involves introducing new products to the market that are not related to the main range. This strategy is usually implemented by companies that are ready to radically change their type of activity and develop new niches.
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Elements of Business Strategy
Modern scientists, based on numerous studies and reports from large companies, have developed methods designed to help entrepreneurs build a successful business.
Define the company's strategic goals. To more effectively implement the sales and marketing plan, it is necessary to formulate the tasks as clearly as possible, determine the deadlines for their implementation and describe the expected results. For example, the successful operation of Amazon and Google for several decades is due to the close connection and compliance of their products and services with how managers see the strategy and main goals of their business.
Select a field of activity. To optimize business processes and successfully conduct business, it is necessary to correctly select sales markets and methods of promoting products and/or services. Research shows that a significant portion of companies operate without defining specific goals and without having a clear idea of the segments in which growth is possible. This approach seriously complicates business development.
What criteria should be used to choose a business strategy?
Develop an effective business management concept that will allow you to draw up a clear plan of measures to optimize internal processes. It is necessary to analyze the current state of affairs, select tools to achieve goals, conduct research on markets and target audience expectations, and develop measures to reduce costs. Thanks to the right tactics, you can significantly accelerate the development of the company and materialize the strategic vision.
Conduct an analysis of the capabilities of competing companies and identify the features of their activities that allow them to occupy strong positions in the market. It is necessary to study their models and strategies that allow them to attract customers (pricing policy, service level, etc.).
Research the market. Many entrepreneurs, when developing their policy, pay great attention to presenting their advantages. At the same time, consumers of their goods and/or services fade into the background. Of course, it is worth conveying information about the company's strengths (certificates, awards, number of outlets, etc.) to clients, as this helps to increase authority. However, for serious business development, it is much more important to have a maximum understanding of the specifics of the segment in which the activity is carried out and the true needs of the target audience.
Perform a SWOT analysis at least once a year. Such studies provide information about the company's strengths and weaknesses, its capabilities, and identify potential risks. All this contributes to the development of the most effective development plan.