engleski

Diversification as growth strategy for small enterprises

Diversification is one of the growth strategies that can be very demanding and implementation includes risks especially for small and medium enterprises. It can be related to business activities in present scope of business operations where company is using synergy or it can mean entering in completely new businesses. Companies are using diversification as growth strategy to reduce risks in present business operations, expand range of products and services, develop competitive advantage and preserve or increase number of employees. The aim of this paper is to emphasize problems related to diversification as growth strategy for small enterprises which is even more risky because of limited resources meaning financial, material and human resources. Top managers’ determination to accept involved risks can be an important issue in process of selecting and implementing diversification as growth strategy. Managers in small enterprises often avoid investments in new businesses and focus on everyday activities which on a long run actually means just surviving. Practical part of this paper is covering case study related to one small Automobile Association. It is non- profit association with business activities related to basic operation which is technical inspection of vehicles. Trough diversification this small enterprise aims to give full service to potential and present customers. They also as non-profit association have objective of preserving present number of employees and increase their number in future.

diversification ; growth strategies ; small enterprises

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