Diversification can be defined as a deliberate move by a company internally or externally to develop, and enter into new products/services or market. It is fundamental for the media industry to diversify its business operations to other related business sectors. The diversification strategy in the television-media industry will involve development of the company outside its current products and market but will remain in the same line of business. Diversification of the television media company will be a related diversification strategy. The new products and market targeted in the diversification process. It will be different from the present products, but within the same business area (Rudolf, 1958). It is vital for the directors and business investors to note the relevance of diversification in the media company.
Diversification in the company will ensure the media house increases its market power. Diversification will ensure the surplus revenue from one business can be used to subsidize the other business. This is a strategy, which many businesses may not have in the same market. It is worth noting the uncertainties in business, and it is, therefore, vital to spread any possible losses. The introduction of new, but related products in the market will create more choices to the customers (Rudolf, 1958). This will lead to an increase in the number of customers. New customers may emerge because they did not patronize the product or service before, but prefer the new product.
The decision by the company to diversify its products and the market is based on extensive research on the prospective market. Althorough research was also carried on the potential customers of products to be presented. The diversification process will ensure the company reaches a winder market, and hence increase revenues. Saturation of the market calls for diversification, which leads to exploration of new markets (Demers, 1993). The process of diversification in the media industry will provide an infrastructure for risk control. This is achieved by ensuring the company and was not dependent on a single line of business and market for its revenues.
Development of a Strategy for Diversification
The process of diversification is because of extensive research on the market and the prospective customers. The television industry is continuously being saturated with television stations starting at a high rate. It is, therefore, imperative to diversify the television media house, and increase the command of the market. The company intends to diversify into the production of a daily newspaper and radio broadcast. The company is well equipped with personnel to kick-start the diversification process. After an extensive research of the market, it was concluded that television broadcast does not reach a large part of the population. One of the goals of the company as per the mission statement is to satisfy the customers. The diversification is aimed at satisfying the current and potential customers.
The company intends to diversify into radio broadcast before proceeding to daily newspaper broadcast. The company intends to generate more revenue from the diversification process. This is to be achieved from the various advertisements, which will be aired on the radio, television, and published in the daily newspaper. The purpose of the diversification process is to increase the company’s revenue, as well as spread the risk of any possible losses across the different enterprises (Demers, 1993). The company’s target is to diversify its business to the international levels. The company’s committed and hardworking workforce are considered to be the greatest assets for the attainment of the company’s goals.
In an effort to ensure successful diversification process, the company will hire some services from other companies. The company has resorted to hire printing services from a successful printing firm at a reasonable cost. The company will create synergy with a business agreement with this firm. The hired firm will ensure quality print of the digital newspaper, before giving it back to the company for distribution. It was considered that the synergy would have a greater performance as compared to a single company (Collins, 1990).
Foreign Market Entry Strategy
The resolution by the firm to penetrate an overseas market was driven by a thorough research of the economic, as well as market, forces facing media firms in the country. In order to enter the foreign market, it was necessary to come up with strategies, which would ensure the media house controls the market. The major objective of the company was to deliver what customers require. Applying the strategy of meeting the customers’ needs would ensure loyalty between the customers and the company (Collins, 1990). The company intends to enter in the foreign media industry. It is evident that the industry is saturated, but application of the correct strategies will ensure a successful entry into the market. The company aims to enter the television industry before diversifying to radio broadcast and daily newspaper publication.
The company aims at delivering comprehensive news, as well as meeting customers’ needs. The company’s strategy is to broadcast in a language that the customers understand. It is within the priority of the company to hire workforce from the target regions. Provision of employment to the locals will also ensure the company creates a good rapport with the target customers.
Challenges in the Foreign Market
It is evident that the media industry is influenced by the political system of the country it operates. Control measures set by the political system may affect the operations of the media industry in the foreign market (Bagdikian, 1992). A totalitarian system of government will put tight control on the business practices of the media house. This may affect the performance of the media house negatively. A mixed capitalist economy will allow the media house to conduct freely its business practices, however, with little regulatory direction. The company has put these factors into consideration and has plans to liaise with these governments. It is within the policy of the company to follow the set regulations. The selection of the foreign market was also based on political systems of those countries.
Scenario when the Company Cannot Diversify
Government policies in a foreign country may hinder the diversification or expansion of business (Bagdikian, 1992). Totalitarian system of government may not be conducive to a media business practice. The measures put across to regulate the media industry by a totalitarian government may not allow freedom to practice the business. In such a scenario, it would not be advisable for the company to explore such a foreign market.
Business Environment Conducive to Ethical Behavior
Every business should have its business ethics, which will ensure that its operations do not affect negatively the surrounding society. The presence of the business in an area should benefit the society around it. The programs aired on the media television should not instill negative or harmful behaviors on the viewers. It is fundamental to evaluate the content of programs to be aired in order to ensure they do not compromise the ethics of the society. The culture of the society in the business surrounding should be considered. The programs aired should go hand in hand with the society’s ethical standards.
Entry into foreign markets is an expansion and a diversification strategy that will benefit the media house and the adoption of the identified factors to enable progress and success.