Official 29 Task 4
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Narrator: Listen to part of a lecture in a Business class.
Professor: OK. So, of course businesses want to sell as many of their products as possible.
Often a business sells mostly one type of product.
But sales of this product may stop increasing because most potential customers have already bought it.
In this situation, many companies will try to diversify,
to develop new or diverse products in order to increase sales.
There are a couple of efficient ways that a company can diversify using some of their existing resources.
One way a company can diversify is to use an existing technology,
technology that they already have to develop a new product.
If a company already has the machines and technology to make a certain product,
sometimes it can efficiently use that same technology to make a different product.
For example, a company that makes televisions might start making computer monitors,
because the technology used to make these two products is very similar.
So the company can use its existing technological resources to make the monitors.
But with the monitors, it can reach new customers.
People that wouldn't buy television screens,
like businesses that need to buy monitors for their employees' computers.
Another way a company can diversify is to try to appeal to its existing customers, its customer base, with a new product.
One of a company's most important resources is its existing customers,
and these customers might have other needs that the company could fulfill with a different product.
For example, a company that sells skis might have a large customer base that enjoys winter sports,
like skiing down snowy mountains, so they might start making ski jackets.
The same customers that buy skis would also need warm ski jackets to wear while their skiing.
And since they like the company's skis,
they might be more likely to buy the jackets with the company's name on them.
Question
Using points and examples from the lecture, explain two ways a company can diversify.