Diversification Strategy Essay Example | Topics and Well Written Essays - 2000 words

Diversification Strategy - Essay ExampleThis research tells that in order to pop off in todays market and especially when SMEs experience high competition from the rival companies or a dec argumentation in their profit levels, a variegation strategy will be of great importance to the continuity of the SMEs. Emerging economy firms tend to expand culturally, geographically and economically. As such, diversification may enable these firms to gain various benefits. Diversification entails three dimensions the output, the market, and the technology of the firm. Another definition by Chandler is that diversification refers to the simultaneous departure from the present product line and the present market structure. Also, Ansoff defined diversification as entailing product, market, and change in the role of the management of the firm. During this process, a firm has to acquire newfangled competencies, skills, and techniques both for the new market and the also for the new product. He f urther emphasizes that the firm has to engage in changing the role of management of the firm. Further, Grandstand defined technology diversification as a move in which the firm improves the performances or the number of functionalities of existing products through the use of new technology. Therefore, diversification can also be defined as the process by which a firm enters into a new market, without essentially leaving its obtainable products, such that it produces a new product or products. This strategy needs a change in the organization it should also develop new technologies within the firm. In addition, Rumelt implied that there is global diversification which is defined as a strategy of locating production activities in foreign jurisdiction that are relatively diverse in terms of court-ordered structures, national cultures, ways of doing business, planning and implementation of international manufacturing, which is a process that deals with issues that arise when SMEs firms in emerging economy locate production facilities in a particular site.