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Apple inc s related and unrelated diversification

Related Diversification or Unrelated Diversification: Understand the differences between related diversification and unrelated diversification before you invest. To diversify in your business, your markets, or your products can be costly; therefore, invest in an efficient diversification strategy.

A diversification analysis needs to demonstrate, and support, that the business will achieve a return on the investment that more than compensates for the risk and the cost.

Apple phone In 2013 – Diversification Strategy And Low Cost Products At Top Of List

Diversification can be segmented into related diversification or unrelated diversification. What is Related Diversification? It is when a business adds or expands its existing product lines or markets. For example, a phone company that adds or expands its wireless products and services by purchasing another wireless company is engaging in related diversification. With a related diversification strategy you have the advantage of understanding the business and of knowing what the industry opportunities and threats are; yet a number of related acquisitions fail to provide the benefits or returns originally predicted.

It is usually because the diversification analysis under-estimates the cost of some of the softer issues: And on the other side, the diversification analysis might over-estimate the benefits to be apple inc s related and unrelated diversification in synergies. What is Unrelated Diversification?

It is when a business adds new, or unrelated, product lines or markets. For example, the same phone company might decide to go into the television business or into the radio business. This is unrelated diversification: Why would a company want to engage in unrelated diversification? Apple inc s related and unrelated diversification there may be cost efficiencies. Or the acquisition might provide an offsetting cash flow during a seasonal lull.

Diversification as an international business strategy and some thoughts about risk.

The driver for this acquisition decision is profit; it needs to be a low risk investment, with high apple inc s related and unrelated diversification for return. Does your capital investment plan leverage diversification? Assess the Opportunity for a Good Return: New markets and new products or services are usually good diversification opportunities; but consider these opportunities in the context of integrating benefits into a much stronger overall unique value proposition.

Does adding the apple inc s related and unrelated diversification products or services provide you with a leveraged opportunity?

For example, if you are a commercial printer and you add basic graphic design services and packaging services to your product line, you will have a leveraged diversification opportunity. You will have saved your client time and money by enabling the client to 'shop' in one-stop providing you can excel at delivering those services.

If you are prepared and able to invest in your business during either good or challenging times, make sure that you develop business performance measures to track the costs and the benefits expected? You need to ensure that the advantages of diversification and the expected benefits from investment are met as you planned.

Related Diversification or Unrelated Diversification:

Ensure that you build those business measures, set up reporting even if it's a manual processand make sure that someone is accountable for the planned results.

Understanding the advantages and disadvantages of unrelated or related diversification strategies is important to the growth of your business. For more timely and regular monthly information on managing your small business, please subscribe here.