Strategic Gap:: Horizontal Diversification

Strategic Gap:
 refers to the gap between the current performance of an organisation

and its desired performance as expressed in its mission, objectives, goals
and the strategy for achieving them. Achieving a long-term goal requires
a series of logical, achievable, sequential steps. Strategic gap is the gap
between company’s short-term goals and long-term goals.
 Creating a strategic plan is important but implementing the plan
successfully is more important .
 Strategic gap is the gap between the strategic plan and its execution .
Diversification Strategies:
is a business growth strategy identified by a company developing new products

in new markets. That definition tells us what diversification strategy is, but it
doesn’t provide any valuable insight into why it’s an ideal business growth
strategy for some companies or how it’s implemented.
Horizontal diversification
If your company decides to add products or services that are unrelated to what
you offer currently, but may meet some more needs of your existing
customers, this is known as horizontal diversification.
Horizontal diversification is typically the diversification strategy with the least

amount of risk involved, as you’re working mostly within familiar customer and
market segments. For example: If a company is in the business of
manufacturing pens then it might also start the business of manufacturing
notebooks/diaries.
Concentric diversification
Concentric diversification occurs when a company enters a new market with a
new product that is technologically similar to their current products and
therefore are able to gain some advantage by leveraging things like industry
experience, technical know-how, and sometimes even manufacturing
processes already in place. Concentric diversification can be beneficial if sales
are declining for one product, as loss in revenue can be offset by a rise in sales
from other products.
For example: If a company produces laptops and it also starts manufacturing

tablets.
Conglomerate diversification
If you’re looking to diversify into completely new markets with unrelated
products to reach brand new customer bases, this is known as conglomerate
diversification. The term conglomerate refers to a single corporate group
operating multiple business entities within entirely different industries. The
parent company that owns all of the individual entities is known as a
conglomerate, and it became one by successfully implementing a
conglomerate diversification strategy.
For example: Hinduja Group. The group is present in eleven sectors including
Automotive, Oil and Specialty Chemicals, Banking & Finance, IT, Cyber Security,
Healthcare, Trading, Infrastructure Project Development, Media &
Entertainment, Power, Real Estate.
Vertical diversification
Vertical diversification is also known as vertical integration, and occurs when a
company moves up or down the supply chain by combining two or more stages
of production normally operated by separate companies. This typically means
the company decides to start taking over some or all of the functions related to
the production and distribution of their core product, such as the purchase of
raw material, manufacturing processes, assembly, distribution and sale.
For example: If a company produces jam and that company decides to grow
the fruits itself.
There are two forms of vertical diversification, which are identified by the
direction you move in the supply chain.
1. Forward diversification
If you’re at the beginning of a supply chain in terms of your business

positioning, you might decide you want to control operations further along the
chain as well. For example: If a farmer who grows wheat decides to make the
flour itself for selling.
2. Backward diversification
If you’re closer to the end of a supply chain, you can think about how to
diversify into the markets that funnel into your product. For example : If a
company produces jam and that company decides to grow the fruits itself.

Strategic Gap:: Horizontal Diversification

Uploaded by

Copyright:

Available Formats

Strategic Gap:: Horizontal Diversification

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Strategic Gap:: Horizontal Diversification

Uploaded by

Copyright:

Available Formats

Strategic Gap:

 refers to the gap between the current performance of an organisation

is a business growth strategy identified by a company developing new products

Horizontal diversification is typically the diversification strategy with the least

For example: If a company produces laptops and it also starts manufacturing

If you’re at the beginning of a supply chain in terms of your business

You might also like