2 Responses 09/16

Mukhesh Work:

Company                       --        NIO                

Diversification Choice  –        Combination of related and unrelated diversification

NIO is a Chinese company that specializes in manufacturing Electric vehicles.  NIO Inc. was founded in 2014 and is headquartered in Shanghai, China. William Li is the founder and CEO of the company (NIO Inc. (NIO) company profile & facts 2021). The company is relatively new and the primary focus is still to increase the scale of electric vehicles sold. But even in these early stages, NIO’s ultimate goal is to create an ecosystem that converts the one-time customer to a lifetime customer. Related businesses possess competitively valuable cross-business value chain and resource commonalities; unrelated businesses have dissimilar value chains and resource requirements, with no competitively important cross-business commonalities at the value chain level (Thompson et al., 2021). Apple is a great example of a successful ecosystem that sells a various range of products to its customers and makes them upgrade these products over the years. To create an ecosystem the products or services should be varied which will bring back or attract new customers even if they don’t own the core products. So, I would definitely choose the combination of related and unrelated diversification to create a slate of products. For an electric vehicle manufacturer, anything related to the battery is an obvious choice of diversification as the battery is the core part of its primary business. The related diversified products are NIO house which deals with servicing and charging centers spaces, NIO power deals with home chargers, superchargers, and Battery subscription service. The unrelated diversified products include NIO life which is a shopping portal for selling lifestyle products from various designers and NOMI a voice assistant. Nio Sells Electric Cars, But Its Vision Is The Future of Mobility. NIO's big vision goes beyond mobile apps, hangout clubs, and a network of fast-chargers and battery-swap stations (Berman, 2019).  The pro from the combination of diversification here is the ecosystem that ties the customer forever and the con would be if the core product doesn’t live up to standards other products will lose the customers. NIO should mostly focus on the core products to increase the customer base before heavily concentrating on the other products.

References:

Berman, B. (2019, April 24). Nio sells electric cars, but its vision is the future of mobility. Retrieved May 14, 2021, from https://insideevs.com/news/342793/nio-sells-electric-cars-but-its-vision-is-the-future-of-mobility/

NIO Inc. (NIO) company profile & facts. (2021, May 13). Retrieved May 13, 2021, from https://finance.yahoo.com/quote/NIO/profile?p=NIO

Thompson, A. A., Peteraf, M. A., Gamble, J., & Strickland, A. J. (2021). Crafting & Executing strategy: The quest for competitive advantage: Concepts and cases. McGraw-Hill.

Rajesh Work:

Diversification is something that keeps the business’s growth continuous by introducing different streams and relevant streams of products and services by the same company. Diversification is helpful for the firm in attracting and expanding the customer base which in turn helps in increasing the sales for the company through different channels and different products and services (Thompson et al., 2022).  Mahindra and Mahindra are into Information Technology and software, automobiles, farming equipment, energy, and many other streams as well.

Mahindra and Mahindra is a top producer of tractors and other agriculture-based equipment. It is one of the top companies in the service of software as well. It is in the financial sector too (Mahindra & Mahindra). Mahindra & Mahindra has nothing in relation when compared to its existing business streams and this pace can be extended by entering other channels like infrastructure, fast-moving consumer goods retail chain. Retail and infrastructure are suggested based on the brand image in the international market. This helps in gaining reputed contracts in infrastructure, the retail market will be completely new for Mahindra & Mahindra, and with the proper strategic move, it will achieve profits in these fields as well (Mahindra).

The best thing about unrelated diversification for Mahindra & Mahindra along with its current products is, it can grow its business chain and create a scope for these industries too. The retail sector in India, in the case of FMCG like metro, d-mart, are fewer when compared to other countries. This way, when the competition is low, Mahindra &Mahindra can make its position fair in the market. However, when it is completely a new stream of the business line, there could be a tough time in introducing the product to the public and other organizations in the case of FMCG retail stores and infrastructure respectively. It could lead to spending more funds on advertising and product positioning.

References:

Mahindra & Mahindra Ltd. (n.d.). Retrieved from http://www.capitalmarket.com/Company-Information/Information/About-Company/Mahindra-and-Mahindra-Ltd/365

Mahindra. Building Better. Retrieved from https://www.mahindra.com/

Thompson Jr. A. A, Peteraf, M. A., Gamble, J. E., and Strickland III, A. J. (2022). Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. 23rd Edition. McGraw-Hill. ISBN: 978-1-260-73517-8