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The theory of marketing in the industrial world - the diversification of the activities

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  1. Introduction
  2. How and why is it chosen ?
  3. Its role and its impact on sales
  4. Conclusion

This document consists of strategic thinking on the diversification of activities. The various topics are based on self knowledge as well as taken as a reference from two articles.

These articles are particularly well matched to the problems that were interesting, that is to say, the diversification of subcontractors in the context of an industry in crisis. This is a general strategic reflection, which differs from the first part towards the end, although the theme remains the same.

The first article is based on "Industrial sub-contractors and the value chain" (October 2009). It brings together different stories and different strategies of diversification, as well as tips to make it easier for companies in Midi-Pyrenees.

The second article "Outsourcing: the PMI that diversify" published in November 1997 provides an update on strategies for diversification of many operations carried out by subcontractors, while offering strategic advice to guide decision makers.

Here is a preview comment: "Outsourcing is a special case in that the parties have a tendency to remain fairly unwelcome dependent on a limited number of contractors. When one of these outsourcers is experiencing setbacks, the example of the crisis is found, and the subcontractor immediately follows. Indeed, in many cases, contractors are virtually a part of the business of the payer. The subcontractors are qualified specialists, and find them helpless when orders fall, because we're talking about skills that are difficult to value in other contexts. The point highlighted in the article is based on industrial subcontractors and the value chain. "

The purpose of diversification is to subcontractors, to break with this situation of dependance in which they are located. For this several strategies are possible. On can cite four main in agreement with most good marketing strategy.

The concentric diversification is the introduction of new activities in which technology is complementary to the current job. The horizontal diversification is the introductopn of new activities that could meet the same customer even if they have little to do with the current job in terms of technology.

The conglomerate diversification is the introduction of new activities to new layers of customers. Patterns of diversity are manifold and one should choose the most suitable. The desire for diversification may take different forms, contact new customers without adapting its technology to the customer, desire to extend its range to attract new customers, diversify its international markets. These actions represent multiple facets of diversification strategies.

Often faced with a concern of dependence, sub-contractors do not generally think it is necessary or see the need to diversify, despite being able to serve many markets.

SME's seem to take refuge in the tranquility of their relationshipis with outsourcers, placing themselves in danger. Several solutions exist and each company should be able to operate diversification strategy suitable to them. The cost factor varies and some may even be too cumbersome to implement.

Any diversification approach involves a lot of work, a need for development and investment and if the risks appear high the results are often more, provided they have studied the situation well before launching into it. Diversification is an almost mandatory step for any company.

Tags: theory of diversification. Importance, marketing strategy

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