Diversification strategy is a completely different strategic option as the company would usually diversify its products, competencies into completely different regions. There is high risk in this strategy but the returns are also high as well.
In relation to the KPN case study, it is observed that the company had chosen to use product development and market development as their new strategic option. KPN chose the aforementioned two strategic options for many reasons. Firstly, the company wanted to focus on their core competencies and dispose of their non-core assets. Secondly, the external factors of change such as privatization, deregulation, technological developments and growth in mobile communications compelled the company to diversify its activities in different markets using new products.
In response to the aforementioned changes, the company first chose the product development strategy by developing new products in the area of mobile and internet for its existing customers such as private individuals, small business and big corporations who were on the verge of changing in terms of expansion with the need of new technologies in telecommunications. The advantage of using this strategy was that KPN now had a clear direction on which it could focus and gain market share by introducing better technology for retention of its customers. As the market grew, the company took its product development strategy in the global arena which turned its strategy into the market development strategic option. The reason for doing so was that many corporations big and small were now playing on the global field with requirements such as just in time deliveries, enterprise resource planning systems and fast telecommunications. The advantage of using market development strategic option was that the company now had broad base of customers in different countries rather than just relying on its