25 Business Diversification Strategy Terms
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Welcome to our guide on business diversification strategy terms!
If you’re a new entrepreneur or a seasoned business owner looking to expand your company, understanding these terms is crucial for success. In this guide, we’ll break down the most important terms related to business diversification and explain why they matter.
- Diversification: The process of expanding a business into new products, services or markets in order to reduce risk and increase revenue.
- Horizontal diversification: A strategy where a company expands its product offering by adding new related products or services.
- Vertical diversification: A strategy where a company expands its product offering by moving into a different stage of the production or distribution process.
- Conglomerate diversification: A strategy where a company expands its product offering by entering into completely unrelated industries.
- Market development: A strategy where a company targets new market segments or geographic locations for their existing products or services.
- Product development: A strategy where a company creates and introduces new products or services to their existing market.
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- Innovation: The process of developing new products, services or processes that can improve the company’s competitive advantage.
- Acquisitions: The act of purchasing another company or its assets in order to expand the business and diversify its portfolio.
- Joint ventures: A partnership between two or more companies for a specific project or business venture.
- Strategic alliances: A partnership between two or more companies to achieve mutual benefits, such as access to new markets or technologies.
- Licensing: The act of allowing another company to use a product, service or intellectual property in exchange for payment.
- Franchising: The practice of granting an individual or group the right to market and sell a company’s products or services under their brand name.
- Spin-offs: The creation of a new, independent company through the separation of an existing business division or subsidiary.
- Divestitures: The process of selling off a part of a company’s assets or businesses in order to focus on core operations.
- Market penetration: A strategy where a company aims to increase market share for its existing products or services by targeting new customers or markets.
- Market diversification: A strategy where a company expands into completely new and unrelated markets, either domestically or internationally.
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- Geographic diversification: A strategy where a company expands its operations into different geographic regions in order to reduce risk and increase market share.
- Brand extension: The practice of using an established brand name to launch new products or services in a different category.
- Product line extension: The practice of adding new variations or versions of existing products to appeal to different customer segments.
- Private label: Products manufactured by one company for sale under another brand name, often used as a diversification strategy by retailers.
- Licensing out: The act of allowing other companies to use a company’s intellectual property in exchange for royalties or fees.
- Outsourcing: The practice of contracting out certain business activities or processes to external service providers.
- Offshoring: The relocation of business activities or operations to a foreign country, often used as a cost-saving measure.
- Digital transformation: The use of digital technologies and strategies to transform and improve a company’s operations, products and services.
- Risk management: The process of identifying, assessing and managing potential risks facing a company in order to minimize negative impacts on its operations and performance.
When it comes to business, diversification is key. It’s important for a company to not rely solely on one product or service, but rather have a variety of offerings in order to survive and thrive in the ever-changing market. In this article, we’ve compiled 25 essential terms related to business diversification strategy that every business owner should know.
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