Question

Under what conditions will a related diversification strategy notbe a source of competitive advantage for a firm?

Instructions

Write a paper addressing the question of related diversification strategies and competitive advantage. Your paper should be at least 300 words long.

Step 1 – Re-read the section in the text on the types of corporate diversification.

Step 2 – Choose a position in response to the question.

Step 3 – Research real-world examples to support your position.

• The web is a valid resource for this research.
• Don’t be afraid to change your position if your research supports a different position than the one you initially took.

Step 4 – Write a paper answering the question. Your paper should:

• Be at least 300 words long
• Use APA style
• Cite all the sources you used
• Provide examples to support your position

Answer 1

Conditions in which related diversification strategy may not be a source of competitive advantage for the form

The types of diversification are related and unrelated diversification strategy. Related diversification is when a business expands its existing product lines or market where is unrelated diversification is when business adds new unrelated product line or market. For example when a telecom company acquired a new company related to 4G Technology it would be called as a related diversification strategy but when a telecom company acquired the new television channel or a radio frequency it would be unrelated diversification strategy.

In most of the cases the related diversification strategy leads to profit and adds to its competitive advantage but in some cases related diversification strategy may not be a source of competitive advantage.

To consider a Real world example, virgin Group of Company chairman Richard Branson decided to diversify into beverages business of producing a product called virgin Cola competiting with market leaders of Coca Cola and Pepsi. Richard Branson collaborated with Cott Corporation to produce Cola under virgin name and marketed and distributed it particularly in new York Times Square. But due to issues with distribution it was an unsuccessful attempt by virgin group leading to significant loss in revenues.

Another example is that of the product New Coke introduced by Coca Cola company. Though the customers initially liked the new Coke but slowly it started to lose the market share as the customer started missing the original flavour of Coca Cola .Finally the company had to withdraw the product due to its failed attempt in introducing new coke.

Works Cited

Failed experiments with Diversification – Business Ideas. (n.d.). Retrieved from Our Business ladder: http://www.ourbusinessladder.com/failed-experiments-with-diversification-business-ideas/

Related Diversification or Unrelated Diversification:. (n.d.). Retrieved from More for small business: http://www.more-for-small-business.com/related-diversification.html