Situation: A CEO wants to expand her company’s business base, either by diversifying its client base, or by going deeper into current clients. What are some of the key questions that should be considered as they evaluate these two alternatives? What’s the optimum business strategy – going broader or deeper?

Advice of the Forum:

• If the company diversifies, what will be the perception of current clients?
  • Will they see this as more or less beneficial to their interests?
• What are the most important objectives – what is leadership trying to achieve? Does the response to this question weigh in favor or one or the other alternative?
• Analyze the available markets, as well as the company’s current share of the existing market. Is the company the dominant player in its market or is there still ample growth opportunity by investing in deeper penetration of the existing market?
• Are there important vulnerabilities regarding the current client base? Is the company too dependent on a small number of customers? What will happen if key customers decide to choose another vendor or to develop internal resources to meet their needs?
• For the option to go deeper into the current client base, what is the resource match between the objective and current resources?
  • Do current employees have the appropriate competencies?
  • What is the available time and dollars to pursue the market?
  • What is the ROI target and what are the risks?
  • Does the company have the right infrastructure to pursue the market, or will it require developing additional infrastructure? What is the cost of development in time, money and resources?
  • It is an area in which the company can excel, and does it align with the passion and drive of the current business focus?

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