business spheres of a company functioning as a system. The key reasons for
diversification are as follows:
1) The advent of new technologies enables enterprises to enter new business
spheres providing them with a status of technological innovators.
2) The attractiveness of new industries and their potential profitability combined
with potential investment opportunities.
3) Entering new business spheres provides companies with synergy.
Diversification management depends on production and market conditions,
resource endowment, and free production capacities [1]. If one task is solved, for
instance, developing and manufacturing new models of shoes, then companies change
directions of production diversification aimed at creating new types of products facing
the largest demand in certain time and competitive environment.
The dependence of integral indicators of production and commercial activity of
companies on parameters of market environment is hard to determine, as there is no
methodology for the integral indicator of company’s diversification [8].
One of the key problems in market economy is the effective capital management.
Diversification, namely investing in several assets, is one of such management methods
[3]. Diversification is also one of the most effective risk management methods.
The Main Directions of Diversification, Classification of Types of
Diversification and Spheres of Their Implementation. There are two main
directions of diversification for industrial enterprises: diversification of product range
and diversification not connected with the main (traditional) production [1]. These
directions have different meaning depending on diversification interpretation: the way
to expand the product range or the way of autonomous development of different
businesses. Thus, production diversification is the process of expanding activity of
specialized enterprises in new production (services) spheres aimed at maximizing the
rate of return [2].
Figure 1 demonstrates classification of types of diversification and spheres of their
implementation.
The system for production diversification relies on analysis and computation, and
consists of four interconnected stages [1]:
1. Choosing the variant for production diversification out of numerous
alternatives.
2. Determining the source and volume of investments.
3. Analyzing and estimating the economic efficiency.
4. Evaluating the volume and conditions of sales of a new product within the
framework of production diversification.
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