Figure 1. The Key Types of Diversification and Spheres of Their
Implementation
Each stage includes decision-making aimed at guaranteeing the efficiency of
production diversification. Companies formulate current tasks based on analysis of
internal resources and general production conditions. It is necessary to evaluate
financial positions, resources endowment, utilization of common production facilities,
innovation potential, and pending orders for products.
Therefore, the company formulates its diversification strategy trying to maximize
the efficiency of usage of its internal resources. Simultaneously, it analyzes market
conditions, dynamics and structure of demand, prospects of technological change in
this particular industry and linked ones, and other external factors (Figure 2).
The choice of a type of diversification determines the production efficiency and
success of diversification as a whole. Table 1 indicates the matrix of financial strategies
for evaluating the growth opportunities (whether they exist or do not).
Types of Diversification
Related
(synergetic, connected)
(consumer, engineering, branding,
franchising, factoring)
Unrelated
(unconnected)
(product distribution, dealer
networks)
Horizontal
(production product) (finance, services)
Vertical
(marketing, processing) (production,
equipment, innovations, marketing)
Conglomerate
(financial)
(services, investment, leasing,
insurance)
Concentric
(financial, marketing)
(export-import operations,
merchandise)
Random
(financial)
(services, merchandise, insurance,
advertising)
Accompanying
(processing)
(trade network)
Targeted
(regional target programs) (technology,
innovations, foreign direct investments,
advertising)
- 145 -