Specialization is the use of resources to focus production on one or few number of goods and services. This type of business puts its focus primarily on perfecting a certain type of product or service to ensure that it is top notch and exceeding the bsic version of that same product or service.
Diversity is the expanding of a certain item or idea in order to reach out to more potentials.
A great example of specialization would be a Starbucks or Fossil. Both companies offer a product or service that is "above the norm" in quality. Starbucks coffee is rich in flavor due to its coffee beans used to produce the product. Less quality beans would produce less quality coffee tastes. It could take years to acquire a great relationship with a good quality bean distributor and use trial and error to determine what works and what doesnt work. Starbucks offers their product at a higher price because the quality is better and has specialized in the coffee industry. Fossil is another example. Fossil has been making high quality watches since 1984 and have specialized in creating watches that can exceed other brands that make watches as an extra thing to do. Their higher price relfects their knowledge in the watch industry and becasue they have been around for a while they can also somewhat determine what works and what does not work. They are not the oldest. Different "tastes" can hurt these companies such as the lack of use for watches due to the rise in technology. Since many people have cell phones this deters the use for watches because all cell phones come with the time as a basic commodity now. They can become an iconic accessory to some people. A possible way to overcome would to create the watches to do more than just tell time to offer more of an incentive. Starbucks has faces a problem with lower prices from competitors that want to establish themselves as a new place to get coffee for a lower price. The quality for these competitive coffees is not as good as Starbucks but the lower price can lure customers to switch. It might be hard for Starbucks to match these lower prices because they have been sustained on the current prices for some time but their good quality coffee will endure the test. Overall, specialization is great thing and a dangerous thing. All strategies have risks, but it seems specialization ensures more direct connection and can depend on a better foundation for future changes in the economy, as opposed to diversifying to reach more markets. Companies like McDonalds that try to reach every market and customer can appeal to more and charge a lower price but offer lower quality but more quantity.Which is better?
Is specialization better than diversifying?
