Can you take a typical example about horizontal ,concentric and lateral products

2x2 Matrices and the BCG matrix
New answer on Aug 04, 2021
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Ngô asked on Dec 26, 2020

since I find horizontal and lateral quite similar

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Gaurav
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updated an answer on Dec 26, 2020
Ex-Mckinsey|Certified Career Coach |Placed 500+ candidates at MBB & other consultancies

Hi Ngô!

Here are some typical examples of these product diversification strategies:

Concentric is the simplest, it's basically companies selling similar products in almost the same customer segment, for example, a company producing desktop computers getting into laptop business.

Horizontal means companies getting into a different product segment, but predominantly keeping the same or similar customer segments, for example, a computer company getting into tabs or anything connected to computing devices.

Lateral (conglomerate) is the toughest, this is where companies get into a completely unrelated product, for example, a computer company getting into producing cars.

Do you have any further questions?

GB

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Muhammad Bashir Hafizu replied on Aug 04, 2021

Honestly, I have never ever heard these terms used in either casing or the business/strategic consulting world. Much more important would be the concept vertical/horizontal integration of companies.

That being said, here are the examples:

Concentric: Desktop manufacturer selling laptops, mouses, keyboards to their existing desktop customers. (i.e. it's something my customers want AND something I should intrinsicly be good at producing)

Horizontal: Desktop manufacturer selling chairs to their existing desktop customers (i.e. it's something my customers want, BUT something I don't necessarily know how to produce)

Lateral/Conglomerate: Desktop manufacturer selling cars to non-current customers (i.e. it has nothing to do with my current customers AND it's not something I'd be naturally good at producing).

Quite obviously, Lateral/Conglomerate moves are pretty silly, risky, and capital-intensive.

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Clara
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replied on Dec 27, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

For consulting cases, it´s enaguh to know the differences between horizontal and vertical.

Cheers,

Clara

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Ian
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replied on Dec 26, 2020
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi Ngo,

Honestly, I have never ever heard these terms used in either casing or the business/strategic consulting world. Much more important would be the concept vertical/horizontal integration of companies.

That being said, here are the examples:

Concentric: Desktop manufacturer selling laptops, mouses, keyboards to their existing desktop customers. (i.e. it's something my customers want AND something I should intrinsicly be good at producing)

Horizontal: Desktop manufacturer selling chairs to their existing desktop customers (i.e. it's something my customers want, BUT something I don't necessarily know how to produce)

Lateral/Conglomerate: Desktop manufacturer selling cars to non-current customers (i.e. it has nothing to do with my current customers AND it's not something I'd be naturally good at producing).

Quite obviously, Lateral/Conglomerate moves are pretty silly, risky, and capital-intensive.

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Gaurav gave the best answer

Gaurav

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