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Related Diversification At Coca Cola

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Related Diversification at Coca Cola
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Related Diversification in Coca Cola
Companies venture into related diversification business approaches for various reasons.
Related diversification refers to a period when a company adds to expand or introduces a new
product for an existing or a new market. Companies in the beverage industry utilize related
diversification as a strategy that enhances their competitive advantage. Coca Cola, a beverage
company, has existed in the soft drink industry for decades and has profoundly implemented
related diversification to improve its competitive advantage. The company may start or venture
into related diversification through introducing a new product to the market, only purchasing an
existing product, or purchasing a new product and rebranding it. Beverages, mostly water, soda,
and juice, can present and enhance a company’s economies of scale. According to Thompson et
al. (2016), companies could diversify into closely related businesses or new business ventures.
Coca Cola, a soda and water producer, acquired a leading juice and dairy company. For
example, according to a Forbes article by Trefis Team (2016), Coca Cola acquired Chi Limited, a
company based in Nigeria that deals with juice and dairy product. Acquiring Chi Limited has
numerous advantages to the Coca Cola company. Purchasing the juice and dairy brands owned by
Chi limited strengthens Coca Cola’s position as a world-leading beverage producer in Africa. This
will happen effortlessly as Chi limited has already established a leading role in Nigeria. Trefis
Team (2016) argues that Coca Cola will have an easy way to position its market in Africa. Coca
Cola banks on product diversification and its increased and consistent presence around the globe.
Acquiring Chi Limited presents Coca Cola with a variety of ways to enjoy cost savings.
Coca Cola takes over two already leading products in Nigeria, meaning that the company will
spend less on an advertisement, reduced cost of staff training, minimum or zero cost of acquiring
infrastructure and machines for starting, and already existing products. These cost savings reduce

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1 Related Diversification at Coca Cola Student Full Name Institution Full Name Course Full Name Instructor Full Name Completion Date 2 Related Diversification in Coca Cola Companies venture into related diversification business approaches for various reasons. Related diversification refers to a period when a company adds to expand or introduces a new product for an existing or a new market. Companies in the beverage industry utilize related diversification as a strategy that enhances their competitive advantage. Coca Cola, a beverage company, has existed in the soft drink industry for decades and has profoundly implemented related diversification to improve its competitive advantage. The company may start or venture into related diversification through introducing a new product to the market, only purchasing an existing product, or purchasing a new product and rebranding it. Beverages, mostly water, soda, and juice, can present and enhance a company’s economies of scale. According to Thompson et al. (2016), companies could diversify into closely related businesses or new business ventures. Coca Cola, a soda and water producer, acquired a leading juice and dairy company. For e ...
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