Understanding the Market — Entrepreneurship STD 11 Commerce — Question

1. Diversification strategy: This is the last strategy of the market expansion grid and involves entering new markets with new products.

‘Diversification' means adding new lines of business to the current one.
It is a risky strategy as the business is new to the market in which it is entering.

2. Synergistic diversification: A diversification strategy that involves finding new products that are technologically compatible with a company's existing products.
3. Horizontal diversification: A diversification strategy that involves making products that are technologically unrelated to a company's existing products.
4. Conglomerate diversification: A diversification strategy that involves making products that are totally unrelated to a company's existing products.

e.g. Wipro, which is in the business of edible oils, soaps has also sprung its business segments in information technology.

5. Combination strategy: A combination strategy is the pursuit of two or more of the above strategies simultaneously. Combination strategies are common, especially for complex organisations operating in dynamic and highly competitive environment. In large diversified companies, a combination strategy is commonly employed when different divisions pursue different strategies.

e.g. in 1989, Texas Air was rapidly expanding its Continental Airlines unit, but its Eastern Airlines operation was being consolidated.
So, it can be concluded that combination strategy is the combination of growth, stability and retrenchment strategies adopted by an organisation either at the same time in its different businesses or at different times in the same business with the aim of improving its performance.