Question

Symphon Times Inc., a Swiss-based premium watch brand, has recently started selling its watches through company-owned retail outlets in major cities of the emerging nations. Which of the following types of diversification strategies is the firm pursuing?
a) geographic diversification strategyb) product-market diversification strategyc) product diversification strategyd) process diversification strategy

Answer 1

Answer:

a) geographic diversification strategy.

Explanation:

In this scenario, Symphon Times Inc., a Swiss-based premium watch brand, has recently started selling its watches through company-owned retail outlets in major cities of the emerging nations. The type of diversification strategies the firm is pursuing is a geographic diversification strategy.

Geographical diversification strategy can be defined as the process of diversifying your investments across various geographical regions (market) so as to improve profits or returns on investment and primarily to mitigate the overall business risk.

Hence, using the geographic diversification strategy Symphon Times Inc., is spreading its risk across various geographical regions or emerging nations by allocation of its resources in order to prevent them from being vulnerable to external conditions and to improve their performance and competitiveness. Thus, a geographic diversification strategy is simply a business management strategy that entails "not putting all your eggs in a basket" rather you should have them spread across in order to prevent or mitigate the overall risks.

Additionally, in order to preserve wealth and to reduce portfolio risks it is advisable that business owners such as Symphon Times Inc. engage in geographic diversification strategy.