CONCENTRIC OR CONGLOMERATE DIVERSIFICATION

DIVERSIFICATION IS A STRATEGY THAT TAKES A COMPANY INTO NEW MARKETS WITH NEW PRODUCTS OR SERVICES. WHEN NEW PRODUCTS ARE MADE FOR NEW MARKET THE STRATEGIES OF DIVERSIFICATION CAN INCLUDE INTERNAL DEVELOPMENT OF NEW PRODUCTS OR MARKETS, ACQUISITION OF A FIRM,ALLIANCE WITH A COMPLEMENTARY COMPANY, LICENSING OF NEW TECHNOLOGIES, AND DISTRIBUTING OR IMPORTING A PRODUCT LINE MANUFACTURES BY ANOTHER FIRM.

THERE ARE TWO TYPES OF DIVERSIFICATION: 1-CONCENTRIC OR RELATED DIVERSIFICATION 2-CONGLOMERATE OR UNRELATED DIVERSIFICATION

CONCENTRIC DIVERSIFICATION
WHEN AN ORGANISATION TAKES UP AN ACTIVITY IN SUCH A MANNER THAT IT IS RELATED TO THE EXISTING BUSINESS DEFINITION OF ONE OR MORE OF A FIRM S BUSINESSES, EITHER IN TERMS OF : CUSTOMER GROUPS SERVED  CUSTOMER FUNCTIONS PERFORMED  ALTERNATIVE TECHNOLOGIES EMPLOYED CONCENTRIC DIVERSIFICATION MAY BE OF THREE TYPES 1-MARKETING RELATED CONCENTRIC DIVERSIFICATION 2-TECHNOLOGY RELATED CONCENTRIC DIVERSIFICATION 3-MARKETING AND TECHNOLOGY RELATED CONCENTRIC DIVERSIFICATION BEST OF BOTH WORLDS IT ENABLES DIVERSIFICATION OF THE ORGANIASATION FROM ITS ORIGINAL BUSINESS AS WELL AS KEEPS IT CLOSE IT IN TERMS OF RELATEDNESS.

 LARSEN& TOUBRO THE LARGEST PRIVATE SECTOR IN THE ENIGINEERING AND CONSTRUCTION INDUSTRY IN INDIA .A MAJOR PART OF ITS REVENUE NEARLY 85%IN 2007 COMES FROM ENGINEERING & CINSTRUCTION BUSINESS.IT HAS MINOR BUSINESSES IN OTHER SECTORS AS ELECTRICAL AND ELECTRONICS, IT, MACHINERY AND INDUSTRIAL PRODUCTS , YET EVEN THESE SECTORS IN DIFFERENT WAYS, FOCUS ON APPLICATION FOR ITS MAJOR BUSINESS OF CONSTRUCTION& INFRASTRUCTURE DEVELOPMENT.AS MACHINERY AND INDUSTRIAL PRODUCTS MAKE CEMENT AND MINING MACHINERY THAT HAVE USE IN THE CONSTRUCTION INDUSTRY. THUS L&T HAS AIMED DEVELOPING FOCUSED ,INTEGRATED BUSINESSES THROUGH ITS RELATED DIVERSIFICATION STRATEGIES

 IFFCO OPERATES IN DIFFERENT BUSINESSES ON THE BASIS OF THEIR RELATEDNESS TO ITS SOULBENEFICIARY INDIAN FARMERS .THE PRIMARY BUSINESS OF IFFCO IS THE PRODUCTION AND DISTRIBUTION OF FERTILIZERS,HOWEVER IT S RLATED DIVERSIFICATION STRATEGIES HAS TAKEN IT INTO OTHER BUSINESSES SUCH AS GENERAL INSURANCE TO OFFER INSURANCE RISK TO ITS FARMERS AND AGRICULTURAL COMMDITIES TRADING TO INABLE FARMERS TO GAIN ACCESS TO QUALITY TESTING AND WAREHOUSE FACILITIES

CONGLOMERATE DIVERSIFICATION
The company markets new products or services that have no technological or commercial synergies with current products but that may appeal to new groups of customers. The conglomerate diversification has very little relationship with the firm's current business. Therefore, the main reasons of adopting such a strategy are first to improve the profitability and the flexibility of the company, and second to get a better reception in capital markets as the company gets bigger. Even if this strategy is very risky, it could also, if successful, provide increased growth and profitability.

ITC'S DIVERSIFIED PORTFOLIO COMPRISES: