Business Studies - What is meant by Diversification?
Hi Charlie - Let me tell you a story and you can
work out from it what diversification is.
Once upon a time there was a company that sold
pottery. Just pottery mind, it was what they were good at. After
some time they noticed that the people who were buying pottery were
also buying cutlery. Lots of their pottery was a wedding present
and the people buying it also bought cutlery. So the pottery company
decided to diversify into cutlery. They learned how to manufacture
cutlery (or maybe they bought a company that knew how to do it already).
Now they sold cutlery AND pottery. They made sure that their products
matched and marketted them accordingly.
'Buy widgets pottery - and get your cutlery at
the same time. Great quality from your tableware manufacturer' -
that was their sales ploy...
After a while they started to get into tablecloths,
then it was candle holders, then candles. pretty soon they sold
everything that went on a table. Then they started on tables...
Now - can you work out what happens when a company
decides to diversify?
Hope this helps - keep studying - work hard - have
fun
Greg Reeve
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