Lessons from Concentric Diversification of Coca-Cola
Through Forbes publication on the diversification of coca-cola, a multinational and local organization can learn new strategies of expanding their operations and growing. Multinational organizations partnership with domestic organizations from other countries provides them a chance to enter new markets with established customers. For instance, Coca-Cola would benefit from the market share Chi limited had established in Nigeria. Multinational organizations learn that they can use their finances to enter into markets that they have limited growth opportunities due to domestic companies (Kim et al., 2017). Multinational corporations will befit by using the existing infrastructure, and raw materials create a new product and service. Apart from the new products, multinational organizations can utilize concentric diversification to boost the presence of their existing products in new markets.
Domestic and small companies also learn from the Coca-Cola diversification strategy. Domestic companies can use the strategy to achieve larger goals using fewer finances and working parts. Partnering with organizations with corresponding marketing, operating, financing, and management efforts can help the firms achieve larger goals, which would not be possible as a separate entity (Arroyo-Blanco et al., 2018). For an instant, Chi limited through the partnership would be able to increase its operations and productions. Though it would not enter global markets, it would increase its dominance in Nigeria. Domestic companies learn that concentric diversification may not last due to the different domination power of the partners. The companies can, however, use multinational management experience and expertise to improve their actions in a different situation.
The organizational lesson expressed through the publication is the growth strategy that includes the use of smaller domestic companies by organizations to enter new markets and dominate. Through related products and markets, organizations can use concentric diversification to achieve strategic fitness in new markets. The lesson also includes the benefit of the centric diversification favoring multinational organizations in the long-run.
References
Arroyo-Blanco, E. A., Boza-Monge, A. E., & Cortés-Morales, R. Concentric diversification: growth without losing competitiveness for a small it firm. e-Society, 2018, 265. https://www.researchgate.net/profile/Piet_Kommers/publication/331174981_Edited_by_ Piet_Kommers_and_Pedro_Isaias_Associate_Editor_Luis_Rodrigues_ISBN_978-989- 8533-75-3/links/5c6ab38492851c1c9de7734d/Edited-by-Piet-Kommers-and-Pedro- Isaias-Associate-Editor-Luis-Rodrigues-ISBN-978-989-8533-75-3.pdf#page=280
Kim, H., Hong, S., Kwon, O., & Lee, C. (2017). Concentric diversification based on technological capabilities: Link analysis of products and technologies. Technological Forecasting and Social Change, 118, 246-257. https://www.sciencedirect.com/science/article/pii/S0040162516306254