Question

How is profit generally achieved with an unrelated diversification strategy

Answer 1

With the unrelated diversification strategy of establishing any new products in the market, the organization can earn profit only if the pre-existing types of products are having a good market reputation in the industry. The pre-existing products that the company presently is earning a major profit should have the market hold in respect to quality, providing better services, supports, and fulfillment of the demands; if all the conditions are fulfilled then only a new product with unrelated diversification can be introduced.
For an example; a company is producing only shoes for all age group and concentrating on various Geographic’s segments. With its extraordinary services, it is extending the business is long range and building the reputation in the market with high growth. The company is focusing on providing equal services to its customer’s and increasing the list of satisfied customers by providing them with good quality products.
In this case, if the company adds an unrelated diversification strategy for upbringing any other type of products apart from shoes, likewise clothes of all varieties and age groups, then the audience concentration will be more on the company. The reason is of the present reputation in the market for its outstanding quality products and a broad range of services. The customers will definitely come forward and retain with the company for their past reputation. The marketing is also necessary for this aspect to make existing customers aware of the new products launch in the market. In this process, the promotions will be established in a mass and to several segments of the population. Through these processes, profit will be achieved a lot in the organization for introducing unrelated diversification of the strategy. Also, it is necessary to maintain the quality equally on both related unrelated products so that the new unrelated diversification and pre-existing type can lead the business with the same quality by maintaining the growth.