Types of Diversification Strategy

The video tutorial explains four types of diversification strategies: concentric, horizontal, vertical, and conglomerate. Concentric diversification involves adding new products closely related to existing ones, leveraging current operations and competencies. Horizontal diversification introduces somewhat unrelated products to the same customer base, relying on brand loyalty. Vertical diversification involves entering different stages of the value chain, such as distribution or raw materials, offering new value lines. Conglomerate diversification presents entirely unrelated products to new or existing markets without depending on brand recognition. These strategies help businesses expand and reach new customer bases.

What is the primary focus of concentric diversification?

• Introducing entirely new products unrelated to current offerings

• Entering new markets with unrelated products

• Focusing on a completely different industry

• Adding new product lines closely related to existing ones

How does horizontal diversification benefit a business?

• By entering a new level of the value chain

• By using the same raw materials for new products

• By leveraging customer loyalty and brand recognition

• By offering unrelated products to new markets

Which of the following best describes vertical diversification?

• Introducing unrelated products to new markets

• Focusing on core competencies

• Entering different levels of the value chain

• Offering new products to the same customer base

What distinguishes conglomerate diversification from other types?

• It focuses on existing customer loyalty

• It involves closely related product lines

• It targets the same customer base with new offerings

• It introduces entirely unrelated products to various markets

Which diversification strategy involves offering loans to customers purchasing vehicles?

• Conglomerate diversification

• Horizontal diversification

• Concentric diversification

• Vertical diversification