What steps can a card company take to diversify its portfolio?
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HowRu, a private card business and its subsidiary, have a 14% share of the greeting card market. The card business is subject to seasonal cycles, with sales being highest during the holiday seasons. For this assignment, please complete the following:
1. What steps can this company take to diversify its portfolio?
2. Define diversification and its necessity in risk management.
3. Discuss at least 5 steps to diversify the card business.
4. Please give at least 6 suggestions of how and where funds can be allocated for new investments.
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Solution Summary
The following posting discusses a company's portfolio. Concepts discussed include risk management, diversification and investments.
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1. What steps can this company take to diversify its portfolio?
The company can diversify organically by creating new businesses in house or by acquiring competitors or companies in the new industry. If the company decides to diversify organically in house, the company will need to hire the management team and workers that have the experience.
2. Define diversification and its necessity in risk management.
Diversification is a corporate strategy that a company uses to enter an industry or market that's different from the core business. There are four reasons for diversification such as: (1) reducing a business's reliance on one or a small number of income sources, (2) eliminates cyclical and seasonal product fluctuations by creating goods and services based on a different demand cycle, (3) obtaining a higher growth rate, and (4) entering a competitor's core business (The information was obtained at http://www.businessdictionary.com/definition/diversification.html 'diversification'). Diversification is a risk management technique.
3. Discuss at least 5 steps to diversify the card business.
(1) The company will obtain financing by one of the 6 options listed below. (2) The ...
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