Diversification of production as a way to improve the efficiency of business activities

As a way to increase the success of economic activity, on the national and world markets, the diversification of production has long been considered as one of the most productive, and therefore - widespread. In its most general form, the diversification of production is a specific and large-scale strategy and practice associated with a fundamental change in the key parameters of doing business and the commodity profiling of the producer. As a rule, in the implementation of this strategy, the company renounces the initial, or previous activities, and proceeds to fundamentally new types of commodity production. The main reason for diversification, as a rule, is the desire to move away from excessive dependence on one commodity market and reorient the enterprise's activities to other, more promising markets.

As local reasons for diversification, we can consider the stagnating state of the traditional market where the company is present, the desire to obtain additional financial benefits and preferences and the desire to reduce the threat of various risks arising from the economic activities of the company.

Diversification of production, as a rule, is realized on the basis of realization of some scenarios - strategies, during which the desired transformations are realized. The most common in modern practice are three such strategies:

1. The strategy of centered diversification, or as it is also called -concentrated, involves using the potential of an already established business to expand the company's growth opportunities. As a rule, this strategy is connected with the expansion of production, the development of the release of new marketable products, the provision of new types of services and services.

2. The strategy of horizontal diversification is carried out through the development of fundamentally new products and its supply to the markets in place of the old one. With this strategy, the calculation is that the new products will be consumed by former customers, for this, in this scenario of diversification, a thorough marketing assessment of the consumer market and a comparison of its parameters with the company's capabilities are carried out.

3. The essence of the diversification strategy, called conglomerate, consists in the physical expansion of the production potential, primarily due to the resources of the enterprise, which are not directly related to production activities and the technological process. This is the most difficult option for diversification, requiring additional financial resources or investments, extensive advertising and marketing activities and highly qualified personnel.

In some sources, diversification of risks is considered as an independent strategy of diversification. Such diversification of production implies the redistribution of the company's assets by various financial institutions and the transformation of these assets into a variety of financial instruments.

The most vivid and practically textbook example of the successful implementation of the diversification strategy is the concept implemented in the 90s of the last century by the Finnish company Nokia, which produced and supplied toilet paper. And the main consumer of the company's products at that time was the Soviet Union. As soon as economic problems in the USSR began to increase, the management of Nokia decided to reorient the company's production facilities for the release of mobile phones. The successful policy of the company, a competent diversification strategy, allowed Nokia to take the leading positions in the cellular communications market and outstrip former leaders of this market - Ericsson and Motorola.