Horizontal Diversification

It means adding parallel products or services to the existing product/ service line. The existing technical, marketing and financial expertise is applied to new products also.

Horizontal diversification can take the following forms:

1. Concentric Diversification:

It is a form of horizontal diversification where companies:

(a) add new products to existing products to serve similar customers in similar markets. This is known as market restated concentric diversification.

If a company selling food products starts selling kitchen ware, it will cater to similar customers in similar markets.

(b) add new products to existing products using similar technology. This is known as technology related concentric diversification. If a company selling televisions starts selling music systems and washing machines it is said to result in technology related concentric diversification’ though however, this is market- related diversification also as the same consumers may buy these products.

2. Conglomerate Diversification:

While the ‘related’ approach to diversification is concentric diversification, the ‘unrelated’ approach is conglomerate diversification. It means adding dissimilar products or services to the existing products. It is diversification into new products, new markets, new technologies or new market unction’s not related to the existing business. Tata industries have followed conglomerate diversification by diversifying into unrelated areas such as automobiles, iron and steel, telecommunication, consumables (salt) etc.

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