Conglomerate Diversification, Turnaround Strategy, Divestiture, Liquidation Essay
Conglomerate Diversification, Turnaround Strategy, Divestiture, Liquidation, 490 words essay example
Essay Topic: situation, position, time, act
Unlike concentric diversification that aims at expanding a company's current products and services, conglomerate services is the strategy by which a company adds new products or services to its business (Thenmozhi, 2012). These are services that are significantly different from a company's existing set of services to its customers. Conglomerate diversification exposes the company to totally new customers as a result of the mismatch in the existing and new services established in the expansion plan.
This form of diversification will be used by Bluewaters Aqua Club in order to facilitate efficient product development. The company plans to set up private primacy tuition schools within its area of operation. Expansion into the education sector will provide it with a stronger brand image in the view of the customers. The tuition centers will provide additional coaching to primary school children during weekends and holidays upon agreements with the parents. Since this is not directly related to the current services offered by the company, it is likely to expose Bluewaters to completely new customers.
Business growth cycle often leads to a position of profit stagnation. At this stage, the company cannot make substantial profits to sustain its business operation. A turnaround strategy is used to shift the approach of a company's business operations to a new direction (Schoenberg, Collie & Bowman, 2013). Turnaround is a strategy that primarily aims at enabling the company to remain in its profitability position or even improve its potential within the same market zone.
Bluewaters' turnaround strategy will change the company to a rotational commercial center. Unlike the present situation that makes the customers reach to the company's facility to access its services, the turnaround strategy will tend to reverse the trend. The company will reach out to its customers through the establishment of mobile facilities. For instance, the company will purchase vans to ship customers to its facilities. In addition, ticket purchase will be done online at the customers' preferred location. Upon approval, the customers will be picked from their areas of residence and transported back upon completion of their mission. This will increase the number of customers to the company and help in boosting the profitability level of the firm.
This is the strategy that involves sale of part or the whole firm. The sale is done at the time when a business is in operation (Harrigan, 2013). Instead of winding up, Bluewaters' assets will be sold out to potential investors upon attaining its business objectives. The company has a 30-year plan after which its management will be transferred to potential buyers in order to continue with its operation. The sale will be done in accordance with the companies Act.
In the course of a company's existence, there comes a time when stagnation in the profits makes it impossible for the company to sustain its business. In severe cases, the turnaround strategy may not work. This could be due to excessive competitive pressure in the company's market (Stefanini, 2013).