The different forms of diversification include:
Diversification occurs primarily when a company decides to make new products for new markets. The company gets involved in activities that differ from those in which it is currently involved. The company selectively changes the product lines, customer targets and manufacturing and distribution arrangements.
Diversification can either be related or unrelated.
Related: – is development beyond the present product market but still within the confines of the industry. It therefore builds on the assets or activities which the firm has
developed. It takes the form of vertical or horizontal integration: – development into activities which are competitive with or directly complementary to a company’s present activity (ies).
Vertical integration: – occurs when a company becomes its own supplier or distributor. Can either be backward or forward.
Horizontal integration:-occurs when a company joins together with another company for which it is in the same state of production, distribution or area of business.
Unrelated: or conglomerate is development beyond the present industry into product/markets which, at face value may bear no close relation to the present product/market.