Portfolio Diversification and Product Variety – Investment in the market

As companies in the toy industry, such as Hasbro, Mattel and Funko, battle declining sales and even reported double-digit revenue declines, Lego, as a company, has shown growth of 1% in the first six months of 2023. While 1 % does not seem like much, it is a business success compared to other toy companies.

To survive as a global company or business, it is key to diversify and offer variety to customers. Companies that adapt and offer a wider variety of services and products are the ones that will survive in the future. We look at three different kinds of companies, their stocks and business strategies, and how they have adapted to modern society to stay successful and offer investors a good return on investment.

As investors, looking at diversified companies that offer product variety is vital, as this helps spread the risk of loss if one product or subsidiary performs poorly. For example, we look at how Lego, Starbucks and Amazon Inc. have managed to stay current, diversify, adapt, increase their market share, and grow their business assets and company holdings.

Lego’s Business Management Strategy – variety creates a larger market share

Lego stays competitive and broadens its customer base by offering new and a wider variety of products that also appeal to adults and children. As a company, they are building on the pandemic-era business growth and extending their product line. Besides traditional Lego packs, as part of their business strategy, they have embraced popular movie franchises like Star Wars, Lord of the Rings, Superheroes, for example, and even famous architectural buildings and monuments to appeal to adult customers.

They are constantly bringing out new concepts like recycled and eco-friendly blocks, and continually staying on trend with the latest, fads, movies, and pop culture. Their figure products are also pretty formidable, with primary characters, superheroes, fantasy heroes, mythical heroes, pop culture figures and culturally diverse figures as seen in ‘The Lego Movie’.

Starbucks adapts its Products for the Global Market

Starbucks does extensive research into local culture to offer beverages that appeal to local tastes in addition to its signature brand of beverages. By offering a different mix of local and traditional products, they can adapt to the culture of their location. This, in turn, appeals to a more extensive customer base apart from just tourists and die-hard Starbucks customers.

They also own subsidiaries, Teavana, Starbucks reserve, Ethos Water and Clover Coffee Equipment Company.

This adaptability of its product range has allowed the business to become one of the most successful consumer brands on the market, with over 35,000 stores internationally.

Amazon’s business strategy of diversification

Its huge service offering makes Amazon one of the most successful and prominent companies in the industry globally. They follow a strategy of concentric diversification. Most know Amazon as the e-commerce online retailer where you can buy practically any product imaginable. But they also own AWS (Amazon Web Services) cloud services, which one in three internet users use daily, Amazon video streaming service that is a direct competitor of Netflix and Disney Plus, digital advertising, electronics such as Kindle, Amazon studios including MGM studios, and AI.

Subsidiary assets include Whole Foods Market, Zoox autonomous vehicles, Kuiper satellite internet systems and IMDb, an online database of information related to films, TV series, podcasts, home videos, video games and streaming content. They are also investing in extensive product technology, innovation and market research to offer interesting, different, technologically advanced, user-friendly, value-for-money services and products. It is easy to see why investors find Amazon stock appealing for their investment portfolios.

Lower Risk Investments – Diversified Assets

Companies that offer a variety of products and have strong diversification in various industries usually carry less risk, as they can weather the storms of volatile markets. As an investor, look for investment funds linked to companies that are well-diversified over various asset classes like stocks, bonds and cash, sectors like finance, infrastructure or energy, and geographic and economic regions like Asia, Europe and the US.

 Always consult a financial advisor before making investing decisions for your financial portfolio, as each person’s risk profile and investment portfolio needs differ. Remember that diversification of your investments could potentially offer better returns as risk is lowered. Time is still the best ally for long-term investments to build wealth.

Please note, the above is for educational purposes only and does not constitute advice. You should always contact your advisor for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.

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