CONGLOMERATE & CONCENTRIC

DIVERSIFICATION

SANDEEP ADHIKARI

CONGLOMERATE DIVERSIFICATION

When an organization adopts a

strategy which requires taking of
those activities which are unrelated
to the existing businesses definition
of one

or more of its businesses

either in terms of their respective

customer groups, customer functions
or alternative technologies, it is
called conglomerate diversification.

EXAMPLE

A car company may decide to enter the computer business,

toothpaste business, furniture business.

Example of Indian company which have adopted apart of growth

and expansion through conglomerate diversification the classic
examples is of ITC, a cigarette company diversifying into the hotel
industry.

CONCENTRIC DIVERSIFICATION

When an organization takes up an

activity in such a manner that is
related to the existing business
definition of one or more of firms
businesses, either in terms of
customer

groups,

customers

functions

or

alternative

technologies,

it

is

concentric diversification.

called

EXAMPLE

For example, Coke purchased several beverage manufacturers to

expand beyond the soft drink industry to the beverage industry.
Cokes acquisitions of Vitamin Water, Honest Tea, Fuze Beverage
and Core Power were concentric diversification moves, providing it
with brand recognition in new categories.

The addition of tomato ketchup and sauce to the existing "Maggi"

brand processed items of Food Specialties Ltd. is an example of
technological-related concentric diversification.