ASIGNMENT

ON
DIVERSIFICATION
BY
VANITHA
0802370129
 DIVERSIFICATION

INTRODUCTION:-

Diversification is one of the grand strategies, which is basically a growth strategy. Basically
diversification involves a substantial change the business definition in terms of product range,
customers or alternative technologies. Diversification strategies have been adopted a number of
business groups and individual both in public and private sectors. In the 1960s-70s, the trend was to
diversify so as not to be dependent on single industry, but the 1980s saw a general reversal of that
thinking. Overall diversification strategies are becoming less popular as organisation is finding it more
difficult to manage divers business activities. Diversification is now on the retreat. Michael porter of
the Harvard Business School says, “management fount [it] couldn’t manage the beast.” Hence,
business are selling or closing, less profitable divisions in order to focus on core business.

WHY DIVERSIFY?

Organization diversifies due to the following reasons. Some of the common reasons are as
follows.

 SYNERGY

 SPREADING OF RISK

 BETTER OPPORTUNITIES

 BETTER UTILIZATION OF RESOURCES

 COMPETITIVE STRATEGY

 MARKET DOMINANCE

TYPES OF DIVERSIFICATION

 CONCENTRIC DIVERSIFICATION

Under concentric diversification new products and service are added to the line with the
condition that these products and service are related to their existing products/services
carried by the organization. For concentric diversification it becomes necessary that the
products or services that ate added must be within the framework of the know and
experience in technology, product lie, distribution channels or customer base of the
organization.

 HORIZONTAL DIVERSIFICATION

Where an organization adds unrelated products and services for existing customers,
this is called horizontal diversification. The strategy is comparatively less risky because the
customers are known. The organization in fully acquainted with their consumer preference
and their expectations about the quality and price of the goods and services.
  CONGLOMERATE DIVERSIFICATION

Conglomerate diversification is growth strategy in which new products and services

are added which are significantly different from the organization’s present product and
services.

ADVANTAGES AND DISADVANTAGES OF DIVERSIFICATION

A company planning to diversification should define its business, conduct SWOT analysis,
Rick analysis, and competition and Gap analysis and also assess the advantages of diversification.

DIVERSIFICATION IN INDIA

Diversification strategy is widely adopted in India. Some example are give here.

o A public sector giant, Oil India Ltd(OIL), which had been operating in oil exploration
and production, diversified into related areas, such as, gas cracking.

o LIC in the insurance business is also in a related area of mutual funds.

Diversification strategy Advantages Disadvantages

Horizontal integration Eliminates competitors. Less flexibility. Increasing

risk commitment.
Access to new markets.

CONCENTRIC Synergy by sharing skills and Reduction in flexibility.

DIVERSIFICATION resources. Economics of
scales and tax benefits. Additional investment.

Untried market and

technology.

CONGLOMERATE Better management and high Lack of concentration.

DIVERSIFICATION ROI. Reducing risk by
spreading business. Risk of managing entirely
new business.

PLANNED DIVERSIFICATION

The one best way of diversifying an organization is to carry the work through systematic
planning. Though many organizations have diversified without any systematic planning, the chance
for a successful outcome is considerably increased when diversification decision is organic part of the
comprehensive strategic planning.

WHEN TO DIVERSIFY?

Diversification merits strong consideration whenever a single-business company is faced with

diminishing market opportunities and stagnating sales in its principal business. But there are four
other instances that signal the for diversifying:
 o When it can expand into industries whose technologies an products complement its present
business.

o When it can leverage existing competencies and capabilities by expanding into business where
these same resource strengths are valuable competitive assets.

o When diversifying into closely related business open new avenues for reducing costs.

o When it has a powerful and well-known brand name that can be transferred to the products of
other businesses.

WHEN NOT DIVERSIFY?

All the organizations cannot think of diversification as a strategy. Organizations do not diversify
under the following conditions.

o When they are small and cannot afford to try

o When they have no power to sustain

o When they ancticipate some pitfalls

o When they are the first to bell the cat in that area

o When on checking they find their functional skills are insufficient to diversify

o When they don’t want to gamble with public investment

o When they do not have attractive tax benefits after diversification

PRODUCT LIST OF ITC LTD

CIGRATES:-

• Navy cut

• Gold flak

• Classic

• Kings

• Insignia

• Silk cut

HOTELS:-

Bukhara

Park

Chola
 Dum Pukht

FOODS:-

• Kitchens of India

• Sunfeast

Mari

Creams

Pasta

• Chips

Bingo

Mad angels

Acharimasti

• Candies

Candyman

Mint-o

LIFESTYLE RETAILING:-

PERSONAL CARE:-

EDUCATION AND STATIONORY:-

SAFETY MATCHS:-

AGARBATIES:-

PACKEING:-

PAPER BOARDS AND SPECIALLY PAPERS:-

AGRI COMMODITIES:-

• E-CHOUPAL

• LEAF TOBACO

IT GROUP:-

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:: New Launches

links to Media Releases:-

Sunfeast World 10K on May 31st '09 Mar 25, 2009

Sunfeast World 10K - Bangalore a huge success!! May 18, 2008
Sunfeast launches special edition of the Sunfeast Sachin Fit Kit range Sep 18, 2007
Aashirvaad launches "Organic Spices" Jul 17, 2007
ITC Foods expands Mint-O Fresh portfolio Jul 16, 2007
ITC launches Bingo Mar 14, 2007
Sunfeast Launches Sachin's Fit Kit Mar 08, 2007
Sunfeast forges a Great Partnership for a Great Innings with Sachin Tendulkar Nov 10, 2006
ITC not to increase price of its 'Aashirvaad' Atta Sep 06, 2006
ITC Limited - Foods Business to bring "Sunfeast Open" to Kolkata for 4 years May 03, 2006
Sunfeast breaks Guinness World Record for simultaneous plantation Sep 05, 2005
Shah Rukh Khan is Sunfeast Brand Ambassador Apr 20, 2005
ITC launches "Sunfeast" range of biscuits Jul 30, 2003
Links to Media Reports :-
We will not enter a segment just to expand our portfolio
Mar 04, 2008
Live mint
Racks to riches
Jan 08, 2008
Business Standard
Mint-O Fresh overtakes Chlormint
Nov 07, 2007
Economic Times
ITC plans launches in food business
Sep 19, 2007
Economic Times
Sunfeast, Kitchens of India keep ITC healthy
Aug 17, 2007
economictimes.com
Bingo! ITC sets sights on domestic frozen food market
Aug 01, 2008
Economic Times
Atta is emotional subject with Indians
Aug 01, 2007
economictimes.com
ITC, Pepsico battle it out in wafers market
Jun 06, 2007
Business Standard
The crackle of ITC's snacky foray
Mar 28, 2007
Hindustan Times
Size of ready to eat market Rs 700 m.
Mar 10, 2007
Indiantelevision.com
ITC feast for children
Oct 30, 2006
Statesman
ITC seeks to export more Kitchens of India products
Aug 30, 2006
The Hindu Business Line
Snack Preview: Surya to make Sunfeast shine
Apr 03, 2006
The Economic Times
ITC Foods plans own facility to make biscuits
Mar 27, 2006
The Hindu Business Line
Shah Rukh to launch ITC’s Sunfeast in US
Mar 22, 2006
The Financial Express
ITC Foods forays into instant mix segment, dishes out 5 products
Feb 21, 2006
The Hindu Business Line
ITC eyes buyouts in foods thrust
Dec 05, 2005
Business Standard
ITC Foods forays into cookies segments
Aug 11, 2005
Sify.com
ITC signs Shah Rukh Khan for Sunfeast
Apr 20, 2005
The Hindu Business Line
ITC Foods slugs it out for market pie
Apr 04, 2005
The Times of India
ITC eyes small FMCG firms
Apr 04, 2005
Business Standard
Jam 'n' spice: the new niche
Dec 05, 2004
timesofindia.com
ITC Foods extends Mint-O brand to hard-boiled candy
Oct 07, 2004
exchange4media.com
ITC Foods open to tie-ups for adding capacities in biscuits
Sep 27, 2004
The Hindu Business Line
'Foods can't afford large overheads'
Jul 29, 2004
The Economic Times
ITC Foods Goes For Soft Launch Of Cooking Pastes
Mar 22, 2004
The Financial Express
Feast For The Senses
Nov 09, 2003
The Telegraph
Slew of domestic launches planned - ITC Foods to tickle overseas palates
Oct 02, 2003
The Hindu Business Line
Getting on a gravy train
Sep 20, 2003
Business Standard
Cookie combat
Sep 18, 2003
Business Standard