Is backward diversification same with conglomerate diversification ?

Expert Solution

No, backward diversification is not same with conglomerate diversification. Followings are the difference between them-

Conglomerate diversification is about adding new products and services into organisation's existing products. Backward diversification is deals with expansion of role of companies in supply chain management.
Sales volume and net earnings will be more in conglomerate diversification in comparison with backward diversification.
Service satisfaction will be always high in backward diversification due to quality supply chain and deliverables in time.
Internal organisation structure can be build in conglomerate diversification. Because increasing product line is the main reason for it. There is no scope for expansion of organisational structure in backward diversification.
Backward diversification helps in cost savings and increases the efficiency. In case of conglomerate diversification, cost savings can be done after the growth stage.

Thank you! All the best for your exam!

jeff jeffy answered 4 months ago

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