Suppose that a business conducts operations in both horizont

Suppose that a business conducts operations in both horizontal and vertical markets. When adding products or services to either market, leadership may consider diversification. What are the strategic alternatives to diversification

Solution

Before answering this question first let us understand the meaning of vertical and horizontal market.

When a company focuses on a niche market then it is vertical market and if it is dealing in wide variety of products then it is horizontal market. When the company increase any product in these markets then it has consider the diversification. Here are some strategic alternatives of the diversification.

The first option is the quality improvement of the current product. This will help them getting a competitive advantage over their competitors. This is very helpful in those condition where alternatives to diversification is very hard to achieve or limited.

Other alternative strategy is that the current company can merge with another company which is producing the same product and services. This will give the company a chance to use the resources of other company. And it will be beneficial in terms of competition. Before merging it was a competitor but after that the competition has been over.

Next option is the increasing the magnitude of the production. The firm can capture more market and will give the company desired goal.

The company can restructure their operations to benefit itself. It is another alternative to diversification. There may be some constraints in the operation. The company can give up those constraints and come up with a new structure which can give a growth to the company,.