Question

Define the following terms: a) Related diversification b) Unrelated diversification and c) Strategic fit. Which one would you apply as the best method and why?

Answer 1

Answer 1)

a) Related diversification: Related diversification is when a company expands its current business in the same business that they are working on in other words in the same product lines that are similar to those it is currently offering. Like Amazon expands its current business into e commerce business only be it taking a new acquisition or expanding self service

b) Unrelated diversification: Unrelated diversification is just opposite of related diversification in which the current business expands business in a completely different sector in other words current business adds new or unrelated product and develops working in new markets. Like Amazon did with prime videos.

c) Strategic Fit: This means that how a company matches/tunes up its resources and capabilities with the external environment. In this companies try to maximize their working environment, brining new technology to enhance the current business as per the latest trends going in the economy. Like mobile phone companies do every 5-7 years

Well if would have to apply then I will go for strategic field at first because strategic field will help me to enhance my current business as per business standards and customer requirement this will make my business grow fast and I will be able to earn more profits then after tuning up this business to maximum then I will go for related diversification and expand my business in the same business by purchasing or acquiring new business then at last I will go for new sectors to make my brand a big brand.