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Strategies for Diversification

INTRODUCTION

The 'Fine idea' also known as 'Fine stationery' is a Pvt ltd. Company which was started in the year 1995 by Mr. Kalpesh. S. Patel with the capital of Rs. 50, 000/- and he is the CEO and chairperson of the firm. They provide printing services and are Manufacturers & License of 'Disney' products. Fine Ideas is producer of stationary, print promotion, desk mats, mouse pads, presentation, brochures and pamphlet, design items. It is a corporation along with operating as distributor from Mumbai. The business also offers ideas and ideas for promotional activities. The company runs efficiently and hardly faces any problems. Recently they encountered a problem of decrease in sales.

They are willing for diversification of their products, to increase their sales. Should they go for diversification of their products to increase their sales or would it not be too dangerous? This led me to create a study question "Should "FINE IDEAS'' consider diversification of their products to increase their sales?"

With the assistance of main research and extra information collected, I used Ansoff Matrix to get the solution to the problem. The main reason for the reduction in sale can be an upsurge in competition. The business is not strong enough to face challenges laid down by opponents. The study will suggest another course of diversification which if company selects will be well worth its survival in the market.

If the business does not produce quick and appropriate decision then it will have to are affected heavy loss. The study will analyze the position of the business on the market. The effect found after analysing the prevailing market conditions and the business's problems is that the firm should think about diversification of the products to come out of this issue of decrease in sales and to re-attain its forecasted sales.

FINDINGS

Diversification is part of the four main marketing strategies identified by the Product/Market Ansoff matrix:

http://www. easilyinteractive. com/blog/uploaded_images/ansoff-779433. jpg

Fine ideas remarked that a diversification strategy is distinguishable from the other three strategies. The first three strategies are usually pursued with the same specialized, financial, and merchandising resources used for the original products, whereas diversification usually takes a company to acquire new skills, new techniques and new facilities which is often provided by 'Fine Ideas'. The idea of diversification is determined by the subjective interpretation of "new" market and "new" product, which should represent the perceptions of the customers.

The strategies of diversification can include internal development of 'Fine Ideas', acquisition of a company, alliance with a complementary company, licensing of new technology, and distributing or importing few products produced by another organization. Generally, the final strategy involves a combination of these options. This mixture is determined in function of available opportunities and consistency with the aims and the resources of the 'Fine Ideas'.

Rationale of diversification

There are two measurements of rationale for diversification. The first one relates to the type of the strategic objective: diversification may be protective or offensive. Protective reasons may be growing the chance of market contraction, or having to diversify when current product or market orientation seems to provide no more opportunities for development. Offensive reasons may be conquering new positions, taking opportunities that guarantee greater profitability than expansion opportunities, or using maintained cash that exceeds total growth needs. The second dimension requires the expected final results of diversification: management may expect great economical value or first and foremost great coherence and complementary to their current activities. Furthermore, companies could also explore diversification merely to get a very important comparison between this strategy and enlargement.

Factors of Risk involved for 'Fine Ideas' to Diversify.

Diversification is the riskiest of the four strategies offered in the Ansoff matrix and requires the most careful analysis for 'Fine Ideas'. Entering an mysterious market with an unfamiliar product offering means too little experience in the new skills and techniques required. Therefore, they'll put themselves in a great doubt. In addition, diversification might necessitate significant expanding of individuals and financial resources, which may distracts focus, dedication and sustained purchases for the 'Fine Ideas'. Therefore they must choose this program only when the current product or market orientation will not offer further opportunities for progress. In order to measure the chances of success, 'Fine Ideas' can also perform different lab tests like the elegance test, the cost-of-entry ensure that you the better-off test. Because of the high risks 'Fine Ideas', may resulted in failure while wanting to diversify. However, there are many good examples of successful diversification like Walt Disney shifted from producing animated videos to theme parks.

Companies like 'Fine Ideas' diversify for a host of reasons. In some instances, it's a success strategy. For instance, if the company makes the bulk of its sales at a particular season, it makes sense to consider diversification. However, there are many other good reasons for diversification, not least by extending your range of goods or services you can either sell more products to your existing customers or get in touch with new markets. This may supercharge the progress prospects of 'Fine Ideas'. As well as perhaps the biggest reason for carrying it out is to increase a brandname reputation into other markets, with the data that making your business bigger than ever imagined.

ANALYSIS OF THE FINDINGS

The analysis was done by discussing with the owner of the company about the land popular of sales over enough time. It was not possible to find the accurate reduction in sales because their firm was only the dealer and the products then will end up in the godown of the marketing firm from where in fact the goods were provided to the vendors and wholesalers. Due to reduction in demand for the existing goods by the people, the products were logged in to the godown of the marketing sector and they also were not recognizing the goods from the Fine Ideas as they curently have stock with them. Henceforth with this examination of the situation it is clearly pictured that is a reduction in sales for the business.

The discussions took place in a confident manner as the current status turned out that it was favourable and befitting the company going for diversification as that was the simplest way out the condition faced by them. Pursuing topic is out of my evaluation but I'd like to mention that they have already put their thought and attempts in diversifying their products in some or the other way by starting their home based business brands as 'Facetoons' which really is a similar kind of printing organization nonetheless they provide print on mugs, plates, t shirts and many more and then the business is growing rapidly as a result of increasing demand of these new idea. This occasion itself proves that it's very essential for them to learn to diversify their products but they should not completely close down 'Fine Ideas' because that is their image and reputation in market so they should work under the hue of 'Fine Ideas'.

Fine ideas had been talking about that business strategies grow the opportunity of reaching goal through diversification to their businesses But, under strict assumptions of dangerous markets, there is no obvious logical for the business to acquire another. Diversification is a campaign strategy and a kind of corporate strategy which is advised for 'fine ideas'. It seeks to increase profitability through greater sales volume from new products and new marketplaces. 'Fine Ideas' can diversify at the business unit level or at the organization level. At the business product level they are most likely to increase into a new segment and at the organization level and it is also very interesting getting into a promising business beyond the scope with their business product.

CONCLUSIONS

Concluding by answering to my research question, "FINE IDEAS'' should consider diversification with their products to increase their sales.

When to diversify for 'Fine Ideas'

History explains to us it isn't a good idea to consider diversification until the main business is steady and profitable. If 'Fine Ideas' remain struggling to gain orders and create a sales time for the key product, there is a real danger that diversification will need your eyeball of the ball.

The catalyst is often the realization that development in the center business is either slowing or establish to decrease, often because the marketplace for a specific product is becoming saturated.

Diversification technique for 'Fine Ideas'

'Fine Ideas' can diversify by natural development. More radically, they increase the brand by offering a much wider range of products that will nonetheless appeal to the same customers. Additionally, they can use the effectiveness of brand to go into new marketplaces.

Another popular business diversification strategy is to look backwards and forwards along the source chain for opportunities to tighten up your hold on the marketplace. For instance, recently people got seen building societies buying estate agents and computer manufacturers buying resellers. In america Google has busily acquired the primary web data evaluation tools, online advertising companies and the internet sites and sites that deliver what they unerringly know their users want.

The negative aspects for 'Fine Ideas'

The company can get a expect the expanded product life routine. Diversification can put you on the fast trail to growth but if the strategy fails it can also burn money. Expanding the product range and even if turnover rises, the increase in costs could cause a slump in revenue. Extend the brand into new marketplaces and there is a danger that it will have no resonance with the newly targeted customers. Thus it's essential to research new marketplaces before diversifying.

'Fine ideas' also needs to look carefully at their existing business. Do they have the right managers to cope with a divaricating strategy? As long as they integrate the varied business into one company or ring fence the new operation as an enterprise in its right? And is also your company strong enough to be an umbrella brand where your primary values resonate over the group? They must think hard before 'Fine Ideas' commit their budget and valuable time.

BIBLIOGRAPHY

  • http://www. fineideas. in/
  • http://www. hotfrog. in/Companies/Fine-Ideas
  • Hoang, Paul, Business and management, IBID Press, 2007
  • http://www. easilyinteractive. com/blog/uploaded_images/ansoff-779433. jpg
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