Managing Strategically Capstone BMGT 265

Assignment 5 Diversification Strategies

Objectives:

A diversification growth strategy involves entering multiple arenas in order to expand your business while reducing the risk of a decline in demand in core markets. A good diversification strategy will also include a clear understanding of business opportunities that a company will NOT invest in.

There are several ways we can assess growth opportunities, such as the Boston Consulting Groups BCG Growth Matrix, the GE McKinsey Growth Matrix and the Ansoff Matrix. In this assignment, you will learn to develop:

1. A Portfolio Growth Matrix
2. An Ansoff Matrix

Project Specifics:

1. This is a group project and cannot be completed individually
2. This assignment must be completed in groups of 3-4 students.
3. Assignment weighting is as per your Course Schedule
4. Structure, grammar and spelling will be evaluated
5. Due date is as per the Course Schedule.
6. No late reports will be accepted.

Key Tasks

1. Review your Kayak Student Manual
2. Read the following article:

Diversification as a Marketing Strategy

3. Use both the Portfolio Growth Matrix and the Ansoff Matrix to guide the development and selection of your Kayak diversification strategies to support your Kayaks positioning.

Assignment Submission Requirements

As a Group, you are to submit the following through Blackboard / Assignments:

1. Your Assignment submission
2. Your Peer Assessment

Diversification Strategies (Use as much space as required)

1. Read the following article:
   1. Diversification as a Marketing Strategy

2. Considering the growth and profitability of your product and market options, classify your products and markets using the following Portfolio Matrix.

	High Market Attractiveness (Growth Rate) Low
High Market Profitability (Profit Margin) Low	Invest for Growth	Milk / Harvest
	Evaluate	Divest

3. How does this Portfolio Growth matrix guide your product and market investment decisions?

4. Classify the following diversification strategies available to your Kayak on the Ansoff Matrix below:
   1. Kayak Refurbishment: Begin a new company that would refurbish kayaks. Because of the increasing cost, it is felt that many Kayak enthusiasts would be interested in rebuilding and refurbishing their current kayak instead of purchasing a new one. The cost would be $250,000 and the ROI is estimated to be in the 1528% range with a medium risk factor.
   2. Competitor Purchase: Purchase a small Kayak producer that is currently competing in two of your markets. The firm is operated efficiently and its kayaks are well accepted in the markets. The owner wishes to retire and is asking $500,000 with liberal credit terms. ROI estimate 2030% with a low to medium risk level.
   3. Training Facility: Open a training facility for Kayak students. The center would specialize in offering the training required to help beginners get started and professionals to compete at the highest level. The cost would be $250,000; ROI of 1520% and risk factor is relatively low.
   4. Kayak Distributor: Become the regional distributor for kayaks from various suppliers and earn a commission of 15% on all sales. The cost of establishing a regional distribution centre, inventory, and first-year marketing expenses is $500,000. The ROI could be negative or as high as 1,000% if successful. The risk factor is relatively high.

	Existing Products	New Products
Existing Markets	Market Penetration	Product Development
New Markets	Market Development	Diversification

5. Considering your Kayaks Positioning Strategy, which of the above Diversification growth strategies would you select? Explain your rationale, highlighting the possible benefits and risks of your selected diversification strategy.