Strategic types of enterprise diversification strategy

Also known as centralized diversification or concentric diversification.

Refers to the company adding new products or services similar to the existing products or services of the enterprise. When considering the implementation of centralized diversification strategy, the newly added products or services must be within the existing professional knowledge and technical experience, product series, distribution channels or customer base of the enterprise. When an enterprise's industry is on the rise, centralized diversification is very useful and feasible to strengthen its position in the field of knowledge and experience.

Successful implementation of centralized and diversified enterprises;

DuPont Company: engaged in explosives, dyes, polishing machines, pigments, heavy chemical products, tetraethyl lead, plastics, pesticides, other agricultural chemical products, refrigerants, light weapons, photographic films, special synthetic rubber, magnetic tapes, synthetic elastic yarns, photographic equipment, antifreeze and various new plastics.

Johnson & Johnson Company deals in bandages, first aid tapes, surgical instruments, baby care products, toilet paper, toothbrushes and hairbrushes, over-the-counter drugs, adhesives, textiles, molded plastic medical equipment, prescription drugs and surgical instruments, and elastic fibers.

Time Company: magazine publishing, book publishing, printing supplies and equipment, pulp, paper, radio and television broadcasting, textbooks, educational materials and supplies, and business information services. It is a growth strategy to increase new products that are significantly different from the existing products or services of enterprises. This strategy seems to be favored by enterprises, and the list of enterprises implementing this strategy is very similar to that of famous American enterprises. The external reasons for enterprises to adopt compound diversification are as follows: (1) The growth of market demand for original products of enterprises is in a long-term stagnation or even a downward trend; (2) The industry is highly concentrated, with strong interdependence among enterprises and fierce competition; (3) The variability and uncertainty of environmental factors force enterprises to pay more attention to the stability of long-term income. The internal reason is that enterprises have strong resources and capabilities.