Silis Autos is known for its affordable and reliable brand of consumer vehicles. Because its shareholders expect to see an improved rate of growth in the coming years, Silis' executives have decided to diversify the company's range of products so that at least 40 percent of the firm's revenue is generated by new business units. However, the company's resources, capabilities, and competencies are limited to producing other forms of motorized vehicles, such as motorcycles and all-terrain vehicles (ATVs). Which type of corporate diversification strategy should Beagle pursue

Businesses that employ diversification techniques enter brand-new industries. Diversification necessitates entering new value chains, as opposed to vertical integration, which includes a company entering a new portion of an existing value chain. Many businesses do this through merging or buying other businesses, while some simply grow into new markets on their own.

What are the three diversification evaluation criteria?

These three requirements must be met in order for a proposed diversification strategy to be accepted.

Test of Attractiveness: How appealing is the market a company is considering entering? Entering a new industry can be exceedingly hazardous unless it has significant profit potential.

Cost-of-Entry Exam: What is the expected entry fee for this industry? Executives must be certain that their company can recover the costs it incurs in order to diversify.

Better Off Test: Will the new unit and the company benefit more as a result? Diversification ought to be avoided until one party or the other acquires a competitive advantage.

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