CMA Intermediate · Operations Management and Strategic Management · Strategic Analysis and Strategic Planning
A packaged foods company in India, with a strong dairy brand, enters the business of fruit juices and plant-based drinks using its existing cold-chain distribution and retail relationships, though the products are new to it. Which strategy best describes this move?
This is concentric (related) diversification. The firm adds new products but builds on its existing cold-chain distribution and retail relationships, so there is a strategic link. Conglomerate diversification would enter unrelated businesses with no such synergy.
- AConcentric diversificationCorrect
- BConglomerate diversification
- CMarket penetration
- DHorizontal integration through acquisition of a rival
Explanation
New products are added, but they link to the firm's existing distribution and marketing strengths, which is the mark of related or concentric diversification. Conglomerate diversification would involve businesses with no such link. Market penetration sells existing products in existing markets, and horizontal integration needs acquiring competitors.
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