What is diversification in marketing quizlet?
Define diversification. Diversification refers to the expansion of an existing firm into another product line or market. It may be related or unrelated. It allows firms to expand their product lines and operating in several different economic markets.
By definition. Diversification is a risk-reduction strategy that involves adding product, services, location, customers and markets to your business's portfolio. This Spotlight shines light on key considerations for businesses interested in growing operations to international markets.
Diversification. A risk management technique that mixes a wide variety of investments within a portfolio. Bond Principal. The face value of a bond.
Related Diversification. -entry into a new business activity that is related to a company's existing business activity OR has commonalities between one of more components of each activity's value chain. -based on transferring and leveraging competencies, sharing resources, bundling products. Unrelated Diversification.
What makes related diversification an attractive strategy? the opportunity to convert cross-business strategic fits into a competitive advantage over business rivals whose operations do not offer comparable strategic fit benefits. Economies of scope.
Which of the following is the best example of related diversification? stem from cost-saving strategic fits along the value chains of related businesses.
Diversification is a technique that reduces risk by allocating investments across various financial instruments, industries, and other categories. It aims to minimize losses by investing in different areas that would each react differently to the same event.
Diversification is a risk-reduction strategy used by businesses to help expand into new markets and industries and achieve greater profitability. This can be attained by diversifying new products and services in new markets, targeting new customers and increasing profitability.
Diversification is a corporate strategy to enter into a new products or product lines, new services or new markets, involving substantially different skills, technology and knowledge. Ansoff pointed out that a diversification strategy stands apart from the other three strategies.
Economic diversification is the process of shifting an economy away from a single income source toward multiple sources from a growing range of sectors and markets.
What does it mean to invest in yourself Everfi quizlet?
What does it mean to "invest in yourself"? Investing in yourself means putting time and money toward your own personal growth.
The main benefit of diversification is that it reduces the exposure of your investments to the adverse effects of any individual stock. Diversifying your investments could even protect you to some degree from the problems associated with insider trading.
Modern understanding of diversification dates back to the influential work of economist Harry Markowitz in the 1950s, whose work pioneered modern portfolio theory (see Markowitz model).
Related Diversification —Diversifying into business lines in the same industry; Volkswagen acquiring Audi is an example. Unrelated Diversification —Diversifying into new industries, such as Amazon entering the grocery store business with its purchase of Whole Foods.
An advantage of unrelated diversification is that competencies can be shared and leveraged throughout the value chain activities.
which of the following is the BEST example of unrelated diversification? a producer of men's apparel acquiring a maker of golf equipment.
Which of the following is an important appeal of a related diversification strategy? Offers opportunities to transfer skills, expertise, technical know-how, or other capabilities from one business to another.
Which of the following is the best example of unrelated diversification? A producer of mens apparel acquiring a maker of golf equipment.
Concentric diversification refers to the development of new products and services that are similar to the ones you already sell. For example, an orange juice brand releases a new “smooth” orange juice drink alongside it's hero product, the orange juice “with bits”.
- Concentric diversification. Concentric diversification involves adding similar products or services to the existing business. ...
- Horizontal diversification. ...
- Conglomerate diversification.
What is called diversification?
1 : the act or process of diversifying something or of becoming diversified : an increase in the variety or diversity of something Between the appearance of complex cells 2.1 billion to 1.6 billion years ago and the explosive diversification of multicellular animals some 800 million years ago, not much happens in the ...
In this page you can discover 21 synonyms, antonyms, idiomatic expressions, and related words for diversification, like: diverseness, diversity, heterogeneity, variegation, heterogeneousness, rationalisation, multiformity, variety, variousness, job-creation and multifariousness.
Simple Diversification
It is the process of altering the mix ratio of different components of a portfolio. The simple diversification can reduce unsystematic risk. The research studies on portfolio found that 10 to 15 securities in a portfolio will bring sufficient amount of returns.
A diversification strategy is a method of expansion or growth followed by businesses. It involves launching a new product or product line, usually in a new market. It helps businesses to identify new opportunities, boost profits, increase sales revenue and expand market share.
Diversifying your offerings can benefit you in a number of ways. For instance, it can increase your brand exposure, attract new customers to your business, open up new revenue streams, minimise seasonal risks and lower production costs due to economies of scope.
There are several factors that influence diversification. These include financial health, attractiveness of the industry and/or market, availability of workforce resources and government regulatory policies. Diversification depends on financial health of a firm.
The manner in which a product is presented can be altered to make it available to a different audience. For example, a household cleaning product could be repackaged and sold as a cleaning agent for automobiles.
A company following a diversification strategy can create value for its shareholders only when the combination of the skills and resources of the two businesses satisfies at least one of the following conditions: An income stream greater than what could be realized from a portfolio investment in the two companies.
Diversification can lead into poor performance, more risk and higher investment fees! The word “diversification” usually makes investors feel safe. But, does it give a false sense of security and lead to investment mistakes? It's hard to argue with the common sense behind diversification within the investment process.
Diversification reduces the drain on compounded performance caused by the volatility of returns. But the benefits of diversification on risk and returns can be achieved only if diversification is used in combination with a rebalancing process. Diversification can be achieved on many different levels.
What does it mean to invest in yourself Everfi?
Investing in yourself means taking the time to establish your financial goals. Investing in yourself means taking the time to plan out your investment strategy. Investing in yourself means putting a portion of all the money you earn into a savings account.
How is a mutual fund different than an index fund? Mutual funds are actively managed while index funds are passively managed.
What is contractionary policy used for? To fight rapid inflation in the economy.
This is Expert Verified Answer
Diversification has the major benefit of the c. reduction in the portfolio's total risk.
Reduces risk by spreading money among a wide array of investments. Investing in a mutual fund is an automatic form of portfolio diversification. When a company combines the funds of many different investors and then invests that money in a diversified portfolio of stocks and bonds.
Asset allocation enables investors to diversify among various financial assets: where some have lower risk and some have higher risk. A diverse portfolio: reduces your exposure to the adverse effects of any one investment.
Diversification reduces asset-specific risk – that is, the risk of owning too much of one stock (such as Amazon) or stocks in general, relative to other investments. However, it doesn't eliminate market risk, which is the risk of owning that type of asset at all.
- Apple | From Computers to MP3 Players and Phones. ...
- Disney | From Cartoons to Cruises, Theme Parks, and Media. ...
- Volkswagen | Selling Cars to Everyone. ...
- Estée Lauder | Cosmetics, Personal Care, and Perfumes. ...
- Pepsi and Coca-Cola | Beverages to Snacks and Energy Drinks.
Diversifying carries the risk of diluting your gains as well as your losses. For example, if you own 50 stocks and one of them doubles, it only amounts to a total gain of 2 percent in your overall portfolio, rather than 100 percent.
Diversified Companies in Practice
Some of the historically best-known diversified companies are General Electric, 3M, Sara Lee, and Motorola. European diversified companies include Siemens and Bayer, while diversified Asian companies include Hitachi, Toshiba, and Sanyo Electric.
What is the difference between vertical integration and related diversification?
While vertical integration involves a firm moving into a new part of a value chain that it is already within, diversification requires moving into an entirely new value chain. Many firms accomplish this through a merger or an acquisition, while others expand into new industries without the involvement of another firm.
“One of the main reasons that diversification fails is because businesses do not have the right strategy in place,” Shipilov said. “They must think carefully about what distinct resources or capabilities they can move between different markets to give them a competitive advantage.
Disadvantages of Related Diversification
Usually, when companies expand into similar areas, they increase their current risks. On top of that, if companies don't execute this strategy, it can bring some adverse impacts.
Diversification can help a company create greater value in three main ways: (1) by permitting superior internal governance, (2) by transferring competencies among businesses, and (3) by realizing economies of scope.
There are four most often cited reasons for diversification: the internal capital market, agency problems, increased interest tax shield and growth opportunities.
Answer and Explanation: 1) Which of the following is an example of diversification : The correct answer is e) Market expansion. To diversify, a company will expand to a new market.
Economic diversification is the process of shifting an economy away from a single income source toward multiple sources from a growing range of sectors and markets.
Modern understanding of diversification dates back to the influential work of economist Harry Markowitz in the 1950s, whose work pioneered modern portfolio theory (see Markowitz model).
A financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.
Concentric diversification refers to the development of new products and services that are similar to the ones you already sell. For example, an orange juice brand releases a new “smooth” orange juice drink alongside it's hero product, the orange juice “with bits”.
Why diversification strategy is important?
The diversification strategy enables companies to find potential markets they can tap into or new products they could launch to increase their sales and revenue.
It aims to minimize losses by investing in different areas that would each react differently to the same event. Most investment professionals agree that, although it does not guarantee against loss, diversification is the most important component of reaching long-range financial goals while minimizing risk.
In this page you can discover 21 synonyms, antonyms, idiomatic expressions, and related words for diversification, like: diverseness, diversity, heterogeneity, variegation, heterogeneousness, rationalisation, multiformity, variety, variousness, job-creation and multifariousness.
Simple Diversification
It is the process of altering the mix ratio of different components of a portfolio. The simple diversification can reduce unsystematic risk. The research studies on portfolio found that 10 to 15 securities in a portfolio will bring sufficient amount of returns.
What is diversification? Diversification is a business development strategy in which a company develops new products and services, or enters new markets, beyond its existing ones. Diversification strategy can kick-start a struggling business, or it can further extend the success of already highly profitable companies.
Diversification means lowering your risk by spreading money across and within different asset classes, such as stocks, bonds and cash. It's one of the best ways to weather market ups and downs and maintain the potential for growth.
- Concentric diversification. Concentric diversification involves adding similar products or services to the existing business. ...
- Horizontal diversification. ...
- Conglomerate diversification.
- 1) You get more product variety.
- 2) More markets are tapped.
- 3) Companies gain more technological capability.
- 4) Economies of scale.
- 5) Cross selling.
- 6) Brand Equity.
- 7) Risk factor is reduced.
Decentralization spreads decision-making authority across an entire organization, rather than being confined to a few top executives.
Which one of these variables is used to measure compensable risk in the capital asset pricing model (CAPM)? Rationale: Beta, β, is used in CAPM to measure compensable, or market, risk.
What type of risk exists in a fully diversified portfolio?
Once diversified, investors are still subject to market-wide systematic risk. Total risk is unsystematic risk plus systematic risk. Systematic risk is attributed to broad market factors and is the investment portfolio risk that is not based on individual investments.
