PAPER PRESENTATIONON

CONCENTRATION OF MARKET&

DIVERSIFICATION OF MARKET

PIYUSH CHAND

M.Eng.(I.T.) Student Fachchoschule Frankfurt am Main

Frankfurt University of Applied Sciences

INTRODUCTION

• Briefing of the Case Study

• Definition

• Reasons

• Case Analysis

• Problems

• Advantages

• Conclusion

BRIEFING OF THE CASE STUDY

• A middle scale Swedish Engineering Company which manufactures Fire-Fighting Equipments was losing profit from the market.

• A new marketing director executed the basic principle of market concentration

• He analyzed that by providing the company’s product to 100 country markets, the orders were very small, the capital gained by the order was comparatively small as compared to expenditure on the services to be provided for the equipments was very big, and also it was time consuming to provide services.

• So, the company decided to concentrate its market from 100 market countries to 50 market companies and also out of these 50 markets, 10 markets were given special attention as the company product was much more successful in this market.

• The company was smart enough to keep an ideal ratio up to 10 markets, which was due to taking in account of any contraction with in a market, this can be very harmful for the company to gain profit.

• Basically the company Business level was diverted from a large single market as a whole to a much concentrated market.

DEFINITION

• CONCETRATION OF MARKET• Extent or degree to which a relatively small number of firms account

for a relatively large percentage of the market.

• DIVERSIFICATION OF MARKET• It is a form of corporate strategy for a company. It seeks

to increase profitability through greater sales volume obtained from new products and new markets.

REASONS

• MARKET GLOBALISATION

• COST GLOBALIZATION

• GOVERNMENT GLOBALISATION

• COMPETIVE GLOBALISATION

MARKET GLOBALISATION

• Common Customer Needs

• Global Customers

• Global Channels

• Lead Countries

COST GLOBALISATION

• Global Scale Economic

• Sourcing Efficiencies

• Favorable Logistics

• Difference In Country Cost(Incl. Exchange Rates)

• High Product Development Cost

• Fast Changing Technology

GOVERNMENT GLOBALISATION

• Favorable Trade Policies

• Compatible Technical Standards

• Common Marketing Regulations

• Government-Owned Competitors & Customers

• Host Government Concerns

COMPETIVE GLOBALIZATION

• High Exports & Imports

• Competitors From Different Continents

• Interdependence of Countries

• Competitors Globalize

CASE ANALYSIS• Basically, in the global environment it was possible to concentrate the business to

small markets, so the company decided to concentrate there business to about 50 countries and more specifically more attention was given to some 10 countries where the returns where promising.

• Eventually the profits increase.

• So, this nature of business act is possible in a Globalization Environment where market Globalization provides the Global customer for the product and make a transfer from the market to a much more Lead market, where the product can give more returns. Cost Globalization provides more benefits for the company as it decreases the investment on the develop of the product and also the difference in currency becomes another factor for good returns as less amount of money will be spent on other supporting services.

• With Government Globalization has its own impact when doing business in the specific 50 countries, with these countries providing good policies for the company, on the other hand it creates a Global competitive Environment, where products of different countries are introduce to the customer, which is beneficial for the customer.

• So Globalization makes concentration of market and diversification market much more possible for companies when they become Global.

PROBLEMS

• Economic Risk

• Trade Barriers

• Cultural Diversity

• Managerial Complexity

• Simultaneous Integration and Decentralization

• High Stakes Competition

ADVANTAGES

• Companies which concentrate on key markets require less administration.

• The planning of marking can be used more effectively for a few ‘best’ markets

• Sales develop better through better staffing, better quality of selling and higher market shares.

• Administration, logistics and supply can be organized more effectively for key markets.

CONCLUSION

• Diversification and Concentration of market are two very important strategies in the Globalization Business world that we live in today.

• By reducing the total number of markets, but retaining those with significant trade, the company improved its profit performance.

THANK YOU……!!! ......