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Ansoff pointed out that a diversification strategy stands apart from the other three strategies. Whereas, the first three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line, the diversification usually requires a company to acquire new skills and knowledge in product development as well as new insights into market ...
Thus, the birth of the M-form was a result of companies needing a structure to complement their business strategy of diversification. However, as its implementation was the result of existential inventory crises in both companies, delivery proved to be as much necessity as inspiration (Alfred D. Chandler and S. Salsbury).
Unlike other strategies that build upon existing strengths, diversification requires venturing into uncharted territory, where the organization may have little or no prior experience. It is considered the riskiest strategy because it requires both product and market development. Introducing any product into a new market involves a lot of research.
This strategy is essentially like buying insurance on the stock market, Neely explained. “You accept small losses over time; but, when the market tanks, tail risk hedges typically go up hundreds ...
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Market penetration is the key for a business growth strategy stemming from the Ansoff Matrix (Richardson, M., & Evans, C. (2007). H. Igor Ansoff first devised and published the Ansoff Matrix in the Harvard Business Review in 1957, within an article titled "Strategies for Diversification". The grid/matrix is utilized across businesses to help ...
Non-incremental diversification is a strategy followed by conglomerates, where the individual business lines have little to do with one another, yet the company is attaining diversification from exogenous risk factors to stabilize and provide opportunity for active management of diverse resources.