Unrelated diversification strategy PDF

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Unrelated Diversification Strategy Unrelated diversification strategy happens when a company offers or manufactures diverse products which have no relation to each other. Two examples of companies that follow this strategy are Amazon, and Walmart. Amazon first started as bookseller Company in 1994. Since then, Amazon has become world’s largest online retailer that has grown tremendously in the past few years, changing customers buying behaviors. Amazon has created a very strong brand image, because they are able to offer their customers a vast range of products and services on their website. Amazon’s products may range from offering house cleaning services to the sale of groceries, and the rental of movies. They also have developed the Amazon Echo which is a hands-free speaker you control with your voice, the Amazon Fire Phone, and the Amazon Kindle which is one device that enables users to browse, buy, download, and read e-books. Walmart first store was opened in 1962, since then it has become one of the largest and more diversified companies in the world. There are different Walmart stores that offers different products and services. Neighborhood Walmart stores focus more on groceries, Walmart.com more in electronics, Walmart supercenters tries to sell mostly general merchandize, and there is also Sam’s club which is one of the largest wholesales in the world. Walmart has also created many food brands, for instance Equate, Great Value, Special Kitty, and Parent’s Choice. These products are exclusively offered in Walmart’s stores. Walmart has also control of Walmart Realty, Walmart Portrait Studio, and Walmart Logistics. Services that Walmart offers in most of their locations are tire and lube, optical service, furniture, jewelry and pharmacy services. Some Walmart stores they also sell gasoline. With all this diversity Walmart has become the one-stop place where people will find what they are looking for at lower prices, so shopping at Walmart

became a very convenient way of shopping, since saves customers’ money, and time due to Walmart vast range of services. As can be seen Amazon, and Walmart are two of the most diversified companies in the globe. Their wide range of products, and services are able to attract more customers, increasing their market share. Companies with unrelated diversification strategy have to have a very knowledgeable management team, since they need to have a good understanding of basically every service their company provide. Some scholars also point out that having an unrelated diversification strategy may make business lose their focus on the company’s core competencies, reducing then the profitability of the company.

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