Sina Gerard, famous for the production of the “akabanga” oiled pepper, has diversified into petroleum products, reports Taarifa Business desk.

Under a newly registered company as Sina Gerard Petroleum Ltd, the tycoon’s decision indicates that he is reading a good business book on diversification strategy.

Diversification is a business development strategy in which a company develops new products and services, or enters new markets, beyond existing ones. Businesses diversify to achieve greater profitability.

Diversification will never be an easy game and managers need to study their cards carefully. Smart players need to know when it’s best to raise their bets and when it’s best to fold.

Havard Business Review research suggests that if managers think about the following six questions, they can push their thinking even further to reduce the diversification bet. Answering the questions won’t lead to an easy decision not to go, but the exercise can help managers gauge the likelihood of success.

The issues raised by the questions and the discussion they generate are meant to be coupled with the detailed financial analysis typical of the diversification decision-making process.

Together, these tools can transform a complex and often pressured decision into a more structured and well-reasoned decision.

So when managers are considering whether or not to diversify, they should ask themselves the following questions:

What can our company do better than any of its competitors in its current market?

Before diversifying, managers need to think not about what their company does but about what it does better than its competitors.

What strategic assets do we need to succeed in the new market?

To diversify, a company must have all the necessary strategic assets, not just some of them.

Can we catch up or overtake our competitors at their own game?

Will diversification break up strategic assets that need to be kept together?

Managers should consider whether their strategic assets are transferable to the industry they have targeted.

Will we simply be a player in the new market or will we come out on top?

What can our business learn by diversifying, and are we organized enough to learn it?

Like good chess players, forward-thinking managers will think two or three moves ahead.