Yunnan Baiyao Case

2. Does it make more sense to focus on market diversification or product diversification, or both?

“Diversification is a form of growth marketing strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry in which the business is already in. At the corporate level, it is generally and its also very interesting entering a promising business outside of the scope of the existing business unit”(Jefferson, 2009).

According to the definition of the Diversification Strategy we believe that Yunnan Baiyao Company was focused on both market diversification and product diversification. We will discuss the reasons from both market and products side.

* As for the market diversification: The Yunnan Baiyao Company attempting to the international market, they established the oversea department and try to cooperate with 3M company which from the United States. This cooperate opportunity with the 3M company is a chance to bring the traditional Chinese herbal medicine into the North American market.

* For the product diversification: The Baiyao was the original product of the Yunnan Baiyao Company, and this product was for external use. As well as in recent years, Yunnan Baiyao Company developed series of new products related the original product Baiyao. Nowadays their new products included the internal use drug, such as Baiyao Capsule and Gong Xue Ning; external use drug, such Baiyao Aerosol, Baiyao Plaster and Baiyao Tincture.

3. Which of the following specific options should the company pursue? Can it pursue both options? Why or why not?

a. Brand extension to healthcare products, such as toothpaste (product diversification)?

b. Alliance with 3M in the area of transdermal products (domestic...