A long-run approach to the implementation of a product diversification program is presented. The model specifies that small supply- or production-oriented firms desiring growth through product diversification consider a particular program to include initial adoption of supply-oriented product imitation, new product development, vertical acquisition, and then horizontal acquisition, and in that order, so that the supply position is firmly entrenched. Then to bring about balance, excess supply stress is reduced by proceeding with demand-oriented diversification strategies (defined in the model) until a firm and lasting base is provided for future operations.
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