What steps can this company take to diversify its portfolio?, 3-4 Pages, management homework help

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Business Finance

Description

HowRu, a private card business and its subsidiary, have a 14% share of the greeting card market. The card business is subject to seasonal cycles, with sales being highest during the holiday season. For this assignment, please complete the following:

  • What steps can this company take to diversify its portfolio?
  • Define diversification and its necessity in risk management.
  • Discuss at least 5 steps to diversify the card business.
  • Please give at least 6 suggestions of how and where funds can be allocated for new investments.

Please submit your assignment.


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Running Head: DIVERSIFICATION AND PORTFOLIO

Diversification and Porfolio
Name
Institution
Date

DIVERSIFICATION AND PORTFOLIO

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Diversification and Porfolio
Introduction
Managers at business institutions continue to face challenges as they strive to make their
companies, firms or organizations remain relevant in the business world. Changing lifestyles in
the society, as well as instabilities in the global economy, has resulted in financial and market risks
which must be adequately dealt with for achievement of any significant incomes. These risks have
mainly become prominent with new and upcoming businesses or those that have not created a
niche in the market. Furthermore, the fierce competition that has arisen in the modern world as a
result of shrinking markets and increased product specialization has fuelled the need for advanced
business and risk management techniques (Marcus et al., 2014).
Steps in Portfolio Diversification
There are several ways in which the company may diversify its portfolio to ensure
continuous growth and development. The first and most important step in portfolio diversification
is identifying a diversification strategy that the company would be best suited to follow. This may
be achieved through market analysis as well as the financial history of the organization. The
management of the business should also seek the advice of other industry stakeholders such as
business analysts to determine the risks and benefits associated with different portfolio
diversification strategies.
The organization should then analyze its strengths and weaknesses on the wake of
expanding operations to new markets. This step is important as it allows the company to build on
its strengths and find solutions to its weaknesses. Company competencies are viewed to be
important when adopting competitive strategies in a market already dominated by a rival
(Lhabitant & Learned, 2002). The next step in the diversification process involves studying the

DIVERSIFICATION AND PORTFOLIO

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market to identify potential regions that could be targeted and yield positive results e.g. regarding
income returns. The presence of rivals, similar products, and the company’s competencies must
be considered in the analysis to ensure that regions with good market opportunities are identified.
The final step involves assessing other companies to determine the potential of merging or
business acquisitions. It is probable that the cost of portfolio diversification is high especially
because of increased duplication of products and services that have left the global market flooded
and short of uniqueness. The company management may, therefore, decide to evaluate already
established similar businesses with an aim of acquiring them or merging to minimize the risks
associated with cap...


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