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Sony,the Japanese company, is involved in insurance and on-line banking as well as computers, electronics and computer games. a) Explain why a company might wish to produce a diverse range of products rather than specialise.

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  • Essay length: 1577 words
  • Submitted: 17/10/2006
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AS and A Level Case Studies and Analysis

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Q. Sony,the Japanese company, is involved in insurance and on-line banking as well as computers, electronics and computer games.

a) Explain why a company might wish to produce a diverse range of products rather than specialise.

[A Level 2003 Paper 4]

Ans.

Diversification involves production of different products by the same company or country. Specialization is the extreme opposite as it means to concentrate in the production of one type of product with the resources available.

With reference to the Japanese company, Sony, it is likely that it has diversified in its production because the electronics market has rapidly changing market conditions. This is because of the fierce competition among the large electronics-producing companies as well as the fast development of technology and hence product development.

For example, in all the cell phone market, recently there has been a demand shock arising as a result of the release of the new model of mobile phone 'k-800i' by Sony Ericsson.The company benefited from massive sales because of the advanced camera features added to the cell. However, only later did the drawbacks involving small memory capacity begin to be realised among the consumers.

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