HowRu: A Private Card Business And Its Subsidiary

HowRu A Private Card Business And Its Subsidia

HowRu, a private card business and its subsidiary, currently hold a 14% share of the greeting card market. This market is highly seasonal, with peak sales during holiday periods. To ensure long-term growth and stability, the company must consider diversification strategies to mitigate risks associated with seasonal fluctuations and market saturation. This paper explores the concept of diversification, its importance in risk management, and proposes five strategic steps for HowRu to diversify its portfolio. Additionally, six specific investment suggestions are provided to support these diversification efforts.

Understanding Diversification and Its Necessity in Risk Management

Diversification refers to the process of expanding a company's portfolio across different products, markets, or investments to spread risk and reduce dependence on a single revenue source (Markowitz, 1952). In the context of HowRu, diversification can protect against downturns in the greeting card industry by exploring alternative business avenues or expanding existing ones. The necessity of diversification lies in its ability to minimize the impact of market volatility, seasonal downturns, or disruptive innovations, ensuring more consistent revenue streams and long-term competitiveness (Bodie, Kane, & Marcus, 2014).

Effective diversification is particularly critical in industries characterized by seasonality or market saturation, such as greeting cards, where demand can be significantly affected by economic cycles, cultural shifts, or technological advancements (Lynch & O'Neill, 2018). Therefore, HowRu must adopt multiple diversification strategies, aligning current strengths with emerging opportunities, to safeguard its future operations and profitability.

Steps to Diversify the Card Business

1. Expanding Product Lines Beyond Greeting Cards

One of the most direct diversification steps is to broaden product offerings into related stationery items such as personalized gifts, ornamental stationery, or customized printing services. By leveraging existing customer data and brand recognition, HowRu can attract a wider audience and increase sales during off-peak seasons (Kotler & Keller, 2016). For instance, introducing personalized calendars or event invitations can generate continuous revenue streams beyond traditional greeting cards.

2. Exploring Digital Gift and Card Solutions

Digitalization presents a significant opportunity for diversification. HowRu can develop digital greeting cards, e-cards, and mobile app solutions, serving tech-savvy consumers seeking instant, eco-friendly options (Mikalef et al., 2018). This digital shift can also encompass subscription-based services for digital greetings, thus providing a steady income regardless of seasonal fluctuations.

3. Entering New Geographical Markets

Geographical expansion can reduce dependence on saturated local markets. HowRu can identify emerging markets with growing middle classes and increasing digital literacy. Expanding operations internationally, either directly or through partnerships, allows the company to tap into new customer bases and diversify revenue sources (Cavusgil et al., 2014).

4. Developing Corporate and Customized Greeting Card Services

Targeting corporate clients with personalized and bulk greeting card options can diversify revenue streams. Businesses often require branded cards for marketing, holidays, or employee recognition, which can be less seasonal and provide consistent demand (Westbrook & McKinney, 2020). This strategic shift entails creating specialized offerings tailored to different corporate needs.

5. Investing in Related Market Segments (e.g., Stationery and Gift Items)

Utilizing existing production capabilities, HowRu can venture into complementary products like stationery, gift wrap, or party supplies. These items have broader market appeal and are less impacted by seasonal variations (Kotler & Keller, 2016). Strategic investments in these related areas can stabilize income and create cross-selling opportunities.

Suggestions for Investment Allocation in New Ventures

  1. Research and Development (R&D): Allocate funds towards developing innovative digital greeting card technologies and environmentally sustainable materials. Investing in R&D can enhance product differentiation and appeal to eco-conscious consumers (Chesbrough, 2003).
  2. Market Expansion Initiatives: Invest in marketing campaigns, distribution channels, and local partnerships for entering new geographical markets. This ensures efficient market penetration and brand recognition.
  3. Digital Infrastructure: Enhance online platforms and mobile apps to support digital products, subscriptions, and personalization features, offering seamless customer experiences (Mikalef et al., 2018).
  4. Acquisition of Complementary Businesses: Acquire small stationery or gift companies to diversify product lines rapidly and gain existing customer bases.
  5. Training and Skill Development: Invest in employee training for digital marketing, product innovation, and international business operations to ensure workforce adaptability.
  6. Brand and Customer Loyalty Programs: Enhance brand recognition through investments in targeted advertising, loyalty rewards, and sustainability initiatives to retain existing customers while attracting new ones.

Conclusion

In conclusion, HowRu’s current market position can be bolstered by strategic diversification efforts across product innovation, geographical expansion, digital transformation, and market segmentation. These steps reduce dependency on seasonal sales and help mitigate risks associated with market fluctuations. Effective allocation of investment capital in R&D, new market entry, technological infrastructure, and corporate services can generate sustainable growth and ensure long-term resilience in a competitive environment. Emphasizing diversification aligns with contemporary risk management practices, positioning HowRu for sustained success amid evolving industry dynamics.

References

  • Bodie, Z., Kane, A., & Marcus, A. J. (2014). Investments (10th ed.). McGraw-Hill Education.
  • Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International Business. Pearson Australia.
  • Chesbrough, H. W. (2003). Open Innovation: The new imperative for creating and profiting from technology. Harvard Business Review Press.
  • Kotler, P., & Keller, K. L. (2016). Marketing Management (15th ed.). Pearson Education.
  • Lynch, R., & O'Neill, M. (2018). Strategic risk management: A practical guide for boards and executives. Routledge.
  • Markowitz, H. (1952). Portfolio selection. The Journal of Finance, 7(1), 77–91.
  • Mikalef, P., Krogstie, J., Pappas, I. O., & Pavlou, P. A. (2018). Investigating the effects of big data analytics capabilities on firm performance: The mediating role of dynamic capabilities. Information & Management, 55(8), 1034-1048.
  • Westbrook, R. A., & McKinney, J. (2020). Corporate gift strategies for a competitive advantage. Journal of Business & Retail Management Research, 14(2), 1-12.

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