Экономические
науки/10.Экономика предприятия
Post-graduate student Prudnikova G.I., senior lecturer
Yerysh L.O.
Donetsk National University of Economics and Trade
named after M. Tugan-Baranovsky, Ukraine
possible
consequences of the diversification of the activity of trade enterprises
The
modern business environment, which is characterized by a significant degree of
uncertainty and unpredictability, forces trade enterprises to seek new ways to
ensure the stability of functioning and the possibility for the further
development. In the conditions of globalization of the world economy associated
with the interaction of technology and capital, trade enterprises are
increasingly conducting diversification of economic activity. Like any of the
areas of development, diversification of the activity includes the development
and implementation of a particular strategy, which reflects the plan of
measures on expansion of the activity of the enterprise. The strategy of diversification of the activity is a target system
of measures for the company to penetrate into other sectors (industrial or
trade), which suggests the inclusion of the new spheres of business to the
portfolio of an enterprise. The analysis of different approaches to the
classification of strategies of diversification of the activity [1-3] has allowed
to distinguish such types:
- the
strategy of related diversification is the creation of new types
of activity, such as those the trade enterprise possesses. The implementation
of this strategy does not require significant changes in the technology and
trade process. The main motive of the related diversification is to ensure
synergy, cost savings due to the strategic conformity between the connected
areas of activity. This strategy can be implemented in vertical and horizontal
directions. The strategy of vertically
related diversification is inclusion to the structure of the enterprise of
other businesses, which are included in the technological chain of the product
promotion. The strategy of horizontally related
diversification suggests the creation of new activities, which
technologically may not be linked to the already existing activities of the
enterprise, but are intended to already existing consumers;
- the
strategy of unrelated (conglomerative) diversification assumes that the
trade enterprise expands through the creation of activities, which are
technologically not connected with the businesses, which are already being
carried out.
The
strategy of related diversification has different positive and negative
consequences. Positive consequences mean
that its implementation leads to the reduction of the cost of goods and services
because of economies of scale: that leads to the receiving of additional
profits by the trade enterprise and to improving the welfare of society because
of the price reduction of products; the presence of strategic conformity
between existing and new lines of business of the enterprise, that is the
source of competitive advantages; costs
reduction through centralized management of related activities; distribution of
risks among the related activities.
Negative
consequences mean the possibility of
reducing the target market of the trade enterprise (with the strategy of horizontally
related diversification); the dispersal of funds and resources between the
various activities; the difficulties associated with identifying and using
synergy; reduction of the strategic flexibility of the enterprise;
The
strategy of unrelated (conglomerative) diversification also has positive and
negative consequences. Positive consequences
mean that commercial risk scattered in different branches of business, which
makes the enterprise less dependent on the problems that may arise in a
particular sphere of activity. Although this argument may also refer to related
diversification, but the merger does not define how this risk is distributed.
Therefore, diversification in unrelated activity may be a more effective mean
of distribution of various risks in comparison with related diversification,
because investments can be distributed between different types of activities.
Financial resources of the enterprise can be invested in the branch of the business,
which has the most attractive prospects from the point of view of ensuring
profitability. The revenue from the activities with a low rate of return can be
used for the acquisition and expansion of enterprises with a high potential of
growth and making a profit. Thus, the financial resources of the enterprise can
be used with the greatest effect. The internal rate of profits of the
enterprise as a whole will stabilize, because certain losses in one business
may be partially compensated by the revenue of another. It means that the cyclical
downturns in some spheres of activity are balanced by the cyclical upturns in
the other. With the accumulation of experience by the management system the
financial conditions of the enterprise stabilize.
Negative consequences are that the strategy of
unrelated diversification is characterized by a high risk in comparison with all
other strategies; unrelated diversification does not allow (in contrast to the
related) to use the synergy effect as a source of the creation of competitive
advantages of business entities. The conglomerative company is characterized by
the complexity of management.
In
conclusion, we can say that in conditions of competition trade enterprises seek
to consolidate their position on the market and react promptly to the changes
in the modern market conditions. Thanks to the development and implementation
of the strategies of diversification of the activity, it is possible. Taking
into account the various positive and negative consequences of each of them,
the enterprise should decide to what degree it is advisably to diversify.
Literature:
1.
Ансофф И. Новая корпоративная стратегия. - СПб: Питер Ком,
1999. - 416 с. - (Серия «Теория и практика менеджмента»)
2.
Портер Майкл Конкурентная стратегия: методика аналаиза отраслей и
конкурентов / Пер. с англ. - М.: Альпина Бизнес Букс, 2005. - 454 с.
3.
Томпсон А.А. Стратегический менеджмент. Искусство разработки и реализации
стратегии: Учебник для вузов / А.А. Томпсон, А. Дж. Стрикленд; Пер. с англ.. под. ред.. Л.Г. Зайцевой,
М.И. Соколовой. – М.: Банки и биржи, ЮНИТИ, 1998. – 576 с.