Explain the factors that influence expansion strategies:concentration strategy or diversification strategy.

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Answer)

Factors that influence the diversification startegy

Attractiveness of the market-If there is an opportunity in a relatively new market with potential gains,diversification can be useful.
Hedging-At times diversification is used to mitigate risk of operating in one or few domains,diversification can be a saviour in such cases.
Show of strengrth-Diversification can be seen by many as a way to solidify your position by signaling other competitors that you are a big player not to be messed with.
Diversification can help you with costs for your other businesses with backward and forward intehration.

Factors that influence the concentration startegy

Focussed approach-If a company is known for a thing,it will try to focus all its energy in that thing to become a top player in that area.
Easy to manage-Concentrated business can be easy to manage in terms of executive team requirements,few and defined layers of management.
Investors' point of view-Investors can see this as a good move to focus on star of the business and let go of not so profitable ventures.

Answer is complete.Thank you!

Rahul Sunny answered 6 months ago

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