Business Diversification – A New Chapter for Vorto
Business Diversification is a development strategy for businesses that wish to either create new products and services or intend to enter new markets in order to move beyond their initial offering. Companies often have different reasons for pursuing a diversification strategy in business. Perhaps the most obvious reason as to why companies diversify is because they wish to grow their revenue. Other reasons include reducing the economic risk of a limited product/service offering portfolio. Diversification can also help support a struggling business to get the kick-start they really need. In short, it is a strategy that helps support the growth of a business.
Business Diversification is a strategy that Vorto Trading has been exploring this year through the creation of an app. The business started as a deliverable foreign exchange company. However, by developing a loyal and happy clientele, we are now looking forward to entering a new chapter for the business, whilst broadening our services and extending our offering to clients within the banking and property sectors.
In light of Vorto’s own diversification experience, Bobby Ward sets out to explore the value of such a strategy and examples of successful companies who have implemented the strategy.
Apple – A computer company to offering phone and music
One of the most prominent examples of a successful diversification strategy is Apple. For several years, Apple ‘s brand identity and offering was a computer and software company. It wasn’t until 1976 that the company created their iconic Macintosh series. Through the initial exploration of this product offering, the company was struggling in the market and by the 1990s, it had fallen far behind competitors such as Microsoft. However, under Steve Jobs’ leadership, the company embraced its first product diversification strategy by embracing the market trend of digital music downloads and launched the very first iPod in 2001. It then implemented its second and most successful product diversification strategy in 2007 by launching the very first iPhone. The diversification strategy ensured the business enjoyed success as the company deviated from being a struggling competitor in a saturated market, to completely creating an entire ecosystem of interlinked technologically driven products. This is a key component to the business strategy and today Apple is one of the most successful businesses in the world.
Estée Lauder – A cosmetics company that entered the personal care and perfumes market
Estée Lauder started its journey in 1946 in the cosmetics space with a catalogue of just three products: a lotion; a cream and a cleansing oil. In the 1960s, the business diversified into markets that related to their existing offering by the launch of their Aramis men’s fragrance. This was when the business began to experience real growth and by the 1990s, it was able to acquire the iconic cosmetic companies Bobbi Brown and MAC in order to strengthen their market share of the sector, whilst enjoying access to additional demographics. In 1997, the company then diversified into the haircare market through its acquisition of Aveda. Today, the New York based company is present on the Fortune 500 list and was recorded to have generated sales of $15bn in 2019.
Both of these two successful diversification strategies illustrate how the strategy to diversify can foster and nurture growth. Apple achieved this by establishing new revenue streams, whilst Estée Lauder grew their market share of existing and different categories within the beauty sector. Both examples enjoyed increased sales and revenue, whilst also protecting both companies from market volatility and mitigating any potential risks of any industry downturns. At Vorto Trading, we are excited to have arrived at this point in our company’s timeline and we are looking forward to our next chapter that is focused on business diversification and the challenges and learnings this step will bring.
Our app which is named ‘V Future’ has been under development since December 2021 and we expect to launch by the end of 2022. We will reveal more about the app’s functionalities soon enough but prepare to be wow’d!