CA Intermediate · Financial Management and Strategic Management · Strategic Choices
Vistara Foods, which makes only branded cooking oil, decides to start making soaps from the same oilseed by-products, using its existing procurement and plant skills. Which strategy is this?
This is concentric diversification. The soap business is a new product but is related to the existing business through the same oilseed by-products and shared skills. Conglomerate diversification would require an unrelated business with no such link.
- AConcentric diversificationCorrect
- BConglomerate diversification
- CHorizontal integration
- DMarket penetration
Explanation
The new product is related to the existing business through shared raw material and skills, which makes it related or concentric diversification. Conglomerate diversification would involve an unrelated business. Horizontal integration means acquiring competitors in the same line.
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