(upbeat music)
-: Counterseasonal,
and countercyclical diversification strategies,
are not common.
However, they can be used by organisations
to reduce revenue volatility,
and grow new revenue streams.
The easiest way to think about
whether either strategy could be applied,
is to consider the industry first.
For counterseasonal,
we're often thinking of the influence
of different weather seasons.
Although there can be other seasonal impacts,
such as certain terms of the year,
that events and festivals are held.
The food industry, is one industry we commonly associate
with seasonal fluctuations.
Tourism is another industry,
that is generally stronger in the summer months,
than winter.
Let's look at examples of the challenges here.
Ice cream, is not a great seller in the middle of winter,
and it's not very practical,
to try and ski down a rocky slope in summer.
If you are an organisation in one of this industries,
then you expect a significant amount of your revenue,
to come in your busy season.
So is there anything you can do,
to counter this for the off season?
A while ago, tourism resort operators in the ski fields
realised that,
mountain biking was a fast growing sport.
They began looking to see what down hill,
and cross country mountain bike trials,
you could establish on the ski fields.
In more recent times,
top level sporting clubs and athletes,
have also used ski resorts
for pre-season altitude training.
And resorts have begun pooling resources together,
to hold gruelling adventure races,
to build brand awareness,
that there is a product offering in the off season.
The ice cream operator,
would need to think about what food products,
they could sell in the winter months.
Crepes and waffles are one possibility.
However it is important to note here,
that just because there is another product you could sell,
does not mean it is a straightforward revenue generator.
If you are Ben and Jerry,
or Trampoline ice cream chains,
that is what you are known for.
And there is a risk of diluting your brand identity,
if you begin offering a range of different products.
Cyclical industries,
are often tied to economic conditions in the country.
The building industry, is one example.
However, like the ice cream operators,
it is not necessarily easy or feasible,
for a building company,
to diversify into other different products or services.
If building construction rights are in decline,
then building supplies, architectural services,
and surveying services are also in decline.
Which are sub-industries more closely linked
to the building industry.
Chocolate and cosmetic sales are often higher
in slight economic down turns.
However, I doubt a building company is going to attempt
to become a competitor to Cadbury .
As you can tell here,
it is not easy to come up with
countercyclical diversification strategies.
And companies in the industries,
like construction, and mining,
tend to simply ride the waves of boom and bust.
Because they do not have the capabilities,
or perhaps want to operate in different markets,
when the industry is having a period of decline.
One example that could be considered,
is that of debt collection.
Pretty much any industry in decline,
will experience a rise in loan defaults.
So companies that could diversify,
into managing debt collection services,
might be able to increase their cash flow
during industry down turns.
To recap,
counterseasonal and countercyclical diversification,
is about how organisations can adapt to external influences,
such as changing seasons and economic cycles,
that may significantly affect their business.
They need to be careful about what sort of
diversification to consider.
As it may require different capabilities,
to what they currently have.
Where diversification can be achieved,
an organisation may be able
to reduce their volatility in revenue,
over the year or years.
And can potentially also open up a new market,
that they can grow into a star or cash cow for the company.