DIVERSIFICATION OF BUSINESS
Let us look at array of well run businesses and think about their products. Nestle, PZ, Flour mill, UAC, Doyin Group, Dangote Group, Unilever, Toyota, Honda, Peugeot, Renault, General Motor and you can keep naming them. One thing is common with them non- of them survive on one product. But it will also interest you that they all started with one product.
It is a word from diversify, The Long man Dictionary of contemporary English says; ‘1. If a business, company, country etc diversifies, it increases the range of goods or services it produces. 2. To change something or to make change so that there is more variety e.t.c’
When you grow your business it is important that you must at a point diversify or add more product line.
Businesses will always grow, and when it is growing it will come with a lot of competition. It is only the smartest that can think ahead that will remain in business. The most difficult thing about business is how to manage growth and success. We can get easily carried away in the process of growth and success and that could affect the business negatively.
Any profitable business must be willing to diversify. Diversification provides you with a good ground to land in case of business challenges. One of the things businesses must always do is to plan. But you cannot diversify if you are not in control of your business. A management tool that will come handy for you any time is to use Your SWOT analysis. If you have been to business school you will have learnt of SWOT analysis.
But it is not a high grammar if you have not being to business school, it simply means
You must do a swot analysis of your existing business and know what to do next.
You must know what you are doing now and doing well and the nature of the environment where you are doing business. That will be also studying the immediate environment and your community.
You must study the government policies and political environment in which you are operating and you must be sure you are doing the right thing.
You must ask your self basic questions about your market and know If you are in good position to introduce a new product into the market.
Do not only look at your existing product but also the products that you are going into. You must do a cost benefit analysis. You must collect samples of existing and competing products.
You should do a scenario planning of the product life cycle.
You must understand the concept of the MIX:
Marketing mix means marketing strategies. The marketing person is used to the four P’s in marketing. Which are:
That is the four angles on which marketing rely to succeed.
DEVELOPING TOOLS OF MARKETING:
Marketing is concerned with human beings, not about animals. In this introduction let us take a look at the Maslow Hierarchy of needs, which includes:
a. Basic physiological needs – They concern the bodily comfort and basic economic needs like foods, clothing shelter etc.
b. Safety needs – Things that can protect human beings from danger.
c. The need for recognition – To be accepted and loved.
d. Ego - satisfying needs – for self esteem
e. Self - fulfillment needs – things that satisfy ambition and personal development.
You will find out that a product can do more than one of the above. The modern marketer has learnt to follow the Maslow hierarchy of needs.
The success of diversification will depend on your cash flow. So you must work with your financial team to determine your cash flow position. If you do not have a finance team, you do a simple arithmetic or book keeping.
You cannot jeopardize the future of your main business because you must diversify. No. you must be in good financial health to do that.
But you must also learn to work with other people’s money to achieve your objectives. Such money could come from your distributors or your suppliers. Growth ideally will come from so many sources of finances, you cannot achieve that alone. but do not do overtrading, a scenario where you will do more than yourself.
Once your company starts to suffer financial ill health, then it will become a problem for you, so do not degenerate up to that level. Diversification is a decision that must be made from time to time. However, decision making is equally important in an organization as a tool in diversification and as a constant tool always.
DECISION MAKING PROCESS
• Oxford Advanced learners Dictionary says “a choice or judgment that you make after thinking and talking about what is the best thing to do”
The success of any organization is based on sound decision making, no doubt. It is however difficult to make correct decisions that can enhance the success of an organization.
To make decision in any organization is a very big task, simple decision can ‘make’ or perish a company. It depends on how well conceived the decision is. A good manager does not make decision arbitrarily. To make a decision, it must be based on available data.
Decision making means solving problems, which can make the organization, survive. Correct decision making must be one of the strategies of survival for any corporate body. An issue must be critically examined, before decision is made. Once a problem is critically examined, it will be easier to get solution. To solve any problem, the problem itself must be first established, other points to consider include the cause of the problem, the effect on the whole company, and how it affects each departments of the organization.
To make decisions, you should be able to establish the problems or problem.
There are two types of decision:
1) Programmed Decision
2) Non-programmed Decision
Since programmed occur often, a routine procedure is likely to be in place. However, in the case of non-programmed, there may be no established procedure. Therefore, you may consider the following:
a) Establish Objectives
b) Identify Alternatives
c) Evaluate Alternatives
d) Choose Alternatives
e) Implement Decision
You must implement diversification in phases so that you will be sure that what you are doing is right.
Test the idea over and over again to be sure. Do a projection of the first three months and another also of one year and two years. Fine tune your books and be sure that they are in order. Be sure you enter the market in a grand style by also planning on your promotional strategy.
If you are selling a product and you do not have confidence in your product no one will buy from you. Your quality control must be very good. And ensure that you produce a qualitative product.
Thanks for the opportunity.
In all I wish you the best and the guidance of God almighty. Amen.