International Diversification

Although international diversification can be identified as one of the above mentioned forms (related or unrelated) depending on the area of the main business activities, it should be discussed separately because of its specific features and significance for the company development.

Multinational diversification is considered one of the strategic paths to continue diversifying the company activities after the diversification at national level has been completed. It also includes diversification of business and of national markets. This process requires to be developed and executed at different strategies - for the different sectors of the company business on the one side, for the different countries (consistent with their national characteristics) on the other. These strategies have to be developed by high competence managers. Regardless of the great challenges and difficulties of its implementation, multinational diversification attracts companies with big opportunities for long term growth by entering new business sectors and growth in the existing business on the markets of other (new for the company) countries.

At the same time it can increase the competitive advantages of the business in different ways:

  • Full use of resources and distribution of costs on the basis of the growing market and product range which leads to economies of scale and accumulated new experience.
  • As a result of the larger scale there are opportunities to capitalize savings during the integrated work in the different sectors using the existing expertise along the business chain.
  • Valuable resources can be transferred from business to business and from country to country.
  • Highly competitive and well-known trademarks can be used jointly.
  • Partnership potential can be capitalized in the form of the different business sectors and countries and strategic coordination.
  • The different business activities at home and abroad can be funded internally which brings better instruments to fight competition and achieve higher sales.