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Haven’t you heard the saying “the more, the merrier”? Organizations go for diversification in the business world for more growth. Horizontal diversification is known to be a great strategy in this regard. A horizontal diversification strategy is used by many big names. It’s imperative that all professionals be familiar with this concept. This blog will explain what a horizontal diversification strategy is with the help of the horizontal diversification definition and some examples.
Horizontal Diversification Definition
If we go by the definition of horizontal diversification, it’s simply a business strategy. Horizontal diversification means adding new products to an existing brand that targets existing consumers. The new products are not alike but diverse.
Prime Examples Of Horizontal Diversification
There have been many successful examples of horizontal diversification over the years. The thought process behind any business plan should be for long-term growth of the business. Even though horizontal diversification has many risks, there are some great examples that show how effective it can be.
Indian Brands
Many Indian organizations and brands have chosen horizontal diversification as a growth strategy. This strategy adds to the organization’s portfolio and has been the reason for great success of these brands. Here are some noteworthy names:
Reliance Industries
One of the most famous examples of horizontal diversification is Reliance Industries Limited (RIL). Earlier in 1960-80, the organization was a megabrand for textile and petrochemical. However, in 1995-96, they entered the telecom business, which was completely different from their previous venture. Later on, this group went for entertainment (Reliance Entertainment, DEN Networks), digital appliances (Reliance Digital) and aviation fuel. Furthermore, clothing brands like AJIO and jewelry brands like Reliance Jewels are also a part of RIL.
ITC
This business venture is another example of horizontal diversification. The organization initially started as the Imperial Tobacco Company in 1910, selling cigarettes and cigars. However, in 1970, the name of the business changed to India Tobacco Company Ltd. (ITC Ltd.), and diversification began. ITC owns luxurious hotel chains and a paper manufacturing organization named Tribeni Tissue Division (TTD). The agribusiness venture of ITC, E-Choupal, is also a great initiative.
In 2000, ITC started a venture for information technology-related solutions as ITC InfoTech India Limited. Later on, ITC ramified toward the food and beverages industry, Sunfeast, Aashirvad and B-natural are its most famous products.
In 2002, ITC started stationary education-related goods under the brand name Classmate. Classmate supplies products under the green initiative. From notebooks and practical books to stationery products, ITC covers it all. Besides this, ITC deals with lifestyle-related products under the brand names ‘Wills Lifestyle’ and ‘Wills Sport’ to serve premium-quality products.
Personal care products like Vivel, Superia and Fiama by ITC are quite famous as well. In addition to this, Mangaldeep incense sticks are also a popular product. ITC sets a great precedent for diversified business strategy and is a successful model of horizontal diversification.
Tata Group
Tata Group started as a small cotton mill in 1874 and went on to become a huge brand with many ventures. The progress of the Tata Group is inspiring and a great example of horizontal diversification. Consumers have faith in Tata, and any venture started by them is a huge success.
Tata Steel and Tata Motors are the most famous brands of the Tata Group. They own the famous Taj Mahal Palace Hotel in Mumbai, which is a one-of-a-kind five-star hotel. Besides this, Tata expanded into the chemicals market as well. Tata Chemicals, Tata Chemicals Europe and Tata Swach are examples of this.
Moving on to the food industry, many well-known brands are under Tata. Starbucks, Tetley, Tata Salt, Tata Tea and Himalayan mineral water are products widely used in India. In addition to this, Tata Cliq, Croma for digital appliances and BigBasket for groceries show Tata’s growing e-commerce presence. (diazepam) Westside also belongs to Tata, as do Landmark bookstores. In energy and engineering, Tata Power, Jaguar Land Rover, Tata Motors, Tata Marco Polo consolidate the organization’s eminence. Tata Consultancy, Tata Sky, CMC Limited are big names in information systems and communication services. Moreover, Tata is present in the aviation industry in the form of Vistara, Air Asia and now Air India. No wonder the Tata Group is a great example of growth using horizontal diversification.
Now, let’s see some international case stories.
International Brands
Many famous global brands own multiple brands with diverse products. A few highly successful organizations that have used horizontal diversification are:
Apple Inc.
In 1976, Apple was set up to manufacture computers. However, later on, once they established the brand name, they went on to mobile phone production. In addition to this, Apple now offers smartwatches, music players and more.
Walt Disney
Walt Disney initially developed its brand value in the animation industry. In addition to this, Walt Disney now owns entertainment and media brands. ABC, Fox Family and Pixar are some famous names under Walt Disney. Another very successful venture of Walt Disney is their theme parks.
Elon Musk Business Ventures
Elon Musk is perhaps the most famous and inspiring business name in today’s day and age. He owns SpaceX, Tesla, PayPal, Neuralink and The Boring Company. All of these deal with fundamentally different types of products. Tesla is a brand for electric cars and SpaceX is a program for development on Mars. How does he do this? Through horizontal diversification strategy.
These were some Indian and global horizontal diversification success stories. As we’ve established, in spite of certain risks associated with it, a well-implemented horizontal diversification strategy can change your fortune for the better.
Conclusion
A horizontal diversification strategy can be excellent for business growth. More productivity and a great customer base are major perks of using this strategy. If you’re planning for a long-term business establishment, look no further.
Harappa’s pathways to success are meant to help you grow a business or nurture an organization with tried and tested theories and approaches. Select a Strategy is one such pathway. This pathway will help you navigate the world of business with strong, actionable insights. Through horizontal diversification and other topics such as horizontal and backward integration, you can master the skill of strategizing.
