The Divisional Form

Let’s say you make canoes in Canada. Why not kayaks? Expand your market with many of the same materials, processes, and customers. Well, then, why not paddles? Different materials but the same customers. And how about docks? After all, some of these customers buy docks. Next thing you know, you’re making icebreakers. Uh oh!

This is the road to diversification—from different products to different businessestaken not only by many companies but also by organizations in the plural and public sectors. Diversification starts with related products or services (kayaks after canoes) and ends with ones that are unrelated (ice breakers) in what is called a conglomerate. For years, big business, especially in America, has ...

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