Diversifications Strategies

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Diversification Strategies

Introduction

The paper discusses the need for diversification strategies of the companies that adopt means and methods to excel in their respective industry and reap untapped profits from the market.

Specifically speaking about the diversification strategies of Amazon and Campbell Soup Company, the discussion assesses the company overview and performance along with the outcomes of their implied diversification strategies.

Diversification

Diversification is known as the process by which a company spends to offer new products and enter new markets, by way of corporate acquisitions or investing directly in new business. There are two types of diversification depending on whether there is any relationship between new and old business of the company (Teece, 1981). The reason that companies are diversified is the search for synergies or a reduction in the overall business risk. Diversification is one of four marketing strategies defined in the Ansoff matrix (Porter, 1980).

Strategies for Diversification

The diversification strategy is that the company adds new products and simultaneously existing markets. This access to new activities, either by internal or external growth the company does operate in competitive environments, improved result is a set of physical and organizational changes affecting the structure of the company and represents a clear break with its history (Wernerfelt, 1984).

A combination vertical merger implies that control various stages of production the same product.

A horizontal combination is one formed by companies in an industry that develop similar products.

Successful Diversification at Amazon

It was Jeffrey Bezos after leaving his job as a programmer on Wall Street, has set the objective to build the best online store in the world (not the first, the best) with an obsessive idea: given to the buyer as the best trading experience (Wernerfelt & Montgomery, 1986). And he founded in 1994 with based in a garage in Seattle - USA, the company Amazon as the first virtual library on the Web. Today is an online retailer of books, music and more, offering services that traditional retailers cannot offer low prices, selections and large well-documented information about the products.

According to Bezos, the future of the electronic sale is in the identification of supply, for example, the buyer is setting out the products that best fit your tastes based on their previous purchases (Wernerfelt & Montgomery, 1988). Their policies are strategic expansion and diversification, since Amazon does not want its brand associated with a product category, but is associated with the idea that works for customers.

Assessing the Success

Amazon successfully adopts the strategy of vertical diversification and effectively collaborates with the suppliers, customers and all other stake holders who are related with the company. Indeed, Amazon was the first to explicitly numbered line every step of the process and accompanies their clients to visit them (Kenny, 2009). Amazon created the Amazon's Publisher's Advantage with other publishers. Amazon has managed to revolutionize the market, thanks to a surprising relationship management with the customer and supplier.

Amazon follows the principles of convenience and peace of mind by ensuring customers the security of purchases. It was the first site ...