Develop and fully explain strategic recommendations at the corporate level that will diversify the firm into two new industries. Each new industry can be related or unrelated to the company’s current industries. Each strategic recommendation should detail how you will accomplish the diversification move (acquisition, strategic alliance, or internal development) and the business-level strategy (i.e., low-cost, differentiation, best-cost, or focus) that you will use to compete in the new industry.
The company is Flowers Foods which is is one of the largest producers of packaged bakery foods in the United States. The company operates 46 highly efficient bakeries that produce a wide range of bakery food for retail and foodservice customers in the U.S. They make bread and pastries.
For flowers foods, two industries are suggested for diversification.
Strategic recommendation for related diversification
Flowers foods should choose a related diversification strategy to diversify its business by selling coffee products to its existing customers. Related diversification strategy is adopted to expand new product line or penetrate into new market with similar products. For this purpose, it is suggested that the company should acquire a local coffee company from coffee industry in the same market to reduce production, marketing and technological risks. Related diversification through acquiring of a business selling coffee products is ideal as pastries and coffees compliment each others. Therefore, related diversification in coffees products selling is suggested. The business level strategy is focus strategy for a particular niche segment of customers who seek coffees with pastries. This strategy can exploit business opportunity and enhance revenue.
Strategic recommendations for unrelated diversification
Unrelated diversification refers to adding new product lines or new market that is not related to existing business. Unrelated diversification strategy is chosen when a new business provides high growth potential. Flower Foods is suggested to acquire an ecommerce company of footwear industry that is selling uniquely designed footwear products. Flowers Foods company should choose acquisition of a company that is doing well and has potential to grow. Footwear Company selling products online is completely unrelated but has high potential as it provides unique design and quality footwear products. The business strategy recommended for this unrelated diversification is differentiation. Differentiation strategy is used to promote unique features of products that are not offered by competitors to gain a competitive advantage. Flowers Foods Company should differentiate its footwear products based on designs to gain a competitive advantage.
These two strategic recommendations are provided to Flower Foods company for diversification of business.
Develop and fully explain strategic recommendations at the corporate level that will diversify the firm into...