Question

How can related diversification create a competitive advantage for the organization?

Answer 1

Related diversification happens when a business expand its activities into product lines which similar to the product they are offering. It like a company who is making computers start to selling tv.

Competitive advantage happens when an organisation is having an advantage over there competitors for the product they are selling. It can be due to the price they are offering or the feature they are providing or it can be due to the brand value they are adding.

Relative diversity create completive advantage as the organisation has created a certain reputation in the eye of customer due the existing product. Customers trust the brand and welcome the new product line.

It is like xyz is making laptop and they did related diversification and started to produce mobile, which is also gain popularity due to existing competitive advantage of the organisation.