Concentric diversification

Concentric diversification. New products are added but they are related to the current ones. 

Consideration of pencillin production serves to illustrate the success of these strategies. Penicillin was produced at a concentration of about 1 ppm by the first penicillin producers that were isolated. By manipulation of culture conditions together with genetic manipulation, yields in excess of 10 g l 1 (excess of 10,000 ppm) are routinely achieved. This development has also been paralleled by the diversification of the... 

Advances in soy protein processing technology have allowed extensive diversification of protein product applications. More sophisticated soy protein products now manufactured have more functionality, better performance, more consistency and better flavor than commercially available defatted soy flour and grits (50% protein dry basis). Among these products are improved textured soy flours, concentrates, and isolates (50%, 70% and 90% protein dry basis, respectfully), functional and non-functional soy protein concentrates (70% protein dry basis) and highly soluble, highly functional isolated soy proteins (90% protein dry basis) (6-8 14-18). 

The chief influence of the periodic table on chemistry was to turn it from endless diversification in a search for unknown compounds and elements to a concentration on order and its underlying cause. Chemistry was able to assimilate the new physics—the electron, radioactive transformation etc., without fundamental change. (Greenaway, 1969, p. 99)... 

The evolution of the two idiosyncratic companies, Witco and Cabot, well illustrates the themes of this book. Witco proved unable to overcome the barriers to entry created by the focused companies and failed to find a secure niche. Cabot, on the other hand, prospered through the decades as a producer of carbon black before turning in the 1950s to the strategy of closely related diversification. Then, as its historian notes, it entered into two completely new arenas. In 1987, however, a new CEO sold the new businesses and returned the company to profitability by concentrating on the base business and closely related businesses. 

In particular, many investors take comfort from a well-diversified multiborrower portfolio and seek to limit the concentration of risks associated with a single-asset transaction. While this approach is understandable and relevant to senior bondholders, this diversification is not necessarily beneficial to junior noteholders who are then exposed to potential losses across the entire portfolio. 

As shown with the minimum-variance method, solution of implementing traditional portfolio optimization is often expressed in highly concentrated portfolio. One alternative to overcome such difficulties is to use the equal weighting approach. This method is often considered as a naive diversification strategy which attempts to capture some of the potential gains from international diversification ([14], p. 229). Its major advantage is robustness as it does not require return or volatility forecasts, which is also one of the most important reasons for popularity of the EQW approach. Despite its simplicity and popularity, EQW certainly has some pitfalls. One of the most obvious is the fact that it does not account for volatilities and correlations between assets. 

Fisons. Ironically this company was founded on fertilizer manufacture and for many years this was a strength of the company. However, losses resulted in the whole fertilizer division being sold to Norsk-Hydro in 1982. This helped profits for the company to rise from 9.3 million in 1981 to 21.1 million in 1982. Its major interests are pharmaceuticals—where its most important success has been the anti-asthmatic drug Intal—and agrochemicals. Diversification into making scientific apparatus and laboratory chemicals, and horticultural materials like composts and peat, were tried, but in the 1990s these were sold to leave the company to concentrate on pharmaceuticals. In 1995 two thirds of its pharmaceutical R D activities were sold to Astra Pharmaceuticals. 

Van Esch (1992) notes that, aside from contaminated raw material (concentrate), 95% of the contamination occurs because production demands of the bottling facility lead to shortcutting sanitation. Thomas and Davenport (1985) further report that product diversification is key to the spread of this spoilage yeast. Production of several product lines within the same facility leads to cross-contamination. They conclude that national and international trade in fruit concentrates has probably served to spread the spoilage yeast. 

Diversification Having at least two manufecturing sites, which permits the shifting of orders, preventing the concentration of suppliers/sites in one location... 

The LTT plot (Figure 17.2) allows comparison of the pattern of diversification of extant taxa in the pleurocarpous mosses with the equivalent curves for the angiosperms and polypod ferns as calculated by Schneider et al. (2004). Note that the shape of these plots is susceptible to differences in the sampling strategy (Nee et al., 1994 Pybus and Harvey, 2(XX) Shaw et al., 2003). Issues of systematic sampling bias were not explored by Shaw et al. (2003), who concentrated instead on the effect of randomized incomplete sampling, allowing them to accept or reject different models of diversification rates. 

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