revenue sources (Chikoto-Schultz & Neely, 2016; Hung & Hager, 2019). Business schools are turning to revenue diversification through new venturing to offset declining MBA enrollment, high business faculty salaries, and changes in accreditation standards that require more engagement with industry. - Increased focus on customer experience. The five categories of businesses determined by level of diversification are as follows: (1) Single business (more than 95 percent of revenues from a single business), (2) Dominant business (between 70 percent and 95 percent of revenue from a single business), (3) Related constrained (a diversified organization earning 1. . Risk Reduction. Who was Igor Ansoff? Revenue Diversification Strategy Helps Deliver Another Strong Quarter. • Overview of the range of funding sources for behavioral health and social service organizations • Deciding on a focus: selecting a strategic diversification strategy • Case study in revenue diversification • Keys to successful diversification 3 . In light of previous findings showing diversification to reduce financial vulnerability in nonprofit organizations (Greenlee 2002; Greenlee and Trussel 2000; Hager 2001; Tuckman and Chang 1991, 1996), we expect an increase in revenue diversification to lead to a decrease in revenue volatility over time. Although each of these revenue diversification strategies present significant opportunities for growth, the extent of this potential will vary based on the specific capabilities of each university: Space is one of the top areas where many healthcare . The most apparent advantage of diversification strategy is that businesses want to increase their revenue and sale. Revenue diversification is a critical component of overall revenue mix, and it requires a holistic approach based on five key revenue diversification levers: continued education, research and innovation, services, asset utilization, and partners (see Figure 1). Strategy & organizational sustainability in intermediary nonprofit organizations: Understanding the revenue diversification strategic actions of managerial leadership in the Small Business . In addition, Deloitte also held a summit with strategy leaders from health systems and health plans in the fall of 2019 to discuss these topics. The share of NII to the total income for the Indian banks has increased on average from 13% in 1999 to 16% by 2020. Publishers continue to remain highly focused on revenue diversification and the value of first party data according to new research from the Association of Online Publishers (AOP), a UK industry body that represents digital publishing companies. They are as follows; Expand business growth One of the primary reasons companies follow the diversification strategy is to expand their business's growth rate. In summary, a diversification strategy can be a goldmine in terms of reach and revenue, but it comes with an element of risk. Modern Portfolio T heory (Markowitz, 1952) in which is explained the risk-reward . Businesses and companies follow the diversification strategy for three significant reasons. The purpose of this paper is to analyze the main strategies NGOs have for revenue diversification, as a path to financial sustainability. . More sources of income means that if one drops out, you're less likely to have to significantly alter your operational plans to account for the change in funding. Our primary independent variable of interest is revenue diversification. The first step to mitigating risk is analyzing your current revenue streams and . This is achieved through expanding (or diversifying) your product or service offering to target new customers and grow profits. Effect on sales team compensation and performance objectives. The university was previously less than 1% revenue diversified; we identified the potential for 10% revenue diversification and prepared a quick-win initiative representing 3% to 4% revenue diversifi-cation that is now being implemented. Diversification involves trying out other businesses and strategies in other to reduce risk and increase revenue. Total revenue growth of 16.8% for the quarter compared to prior year was led by the ACMI line of business that posted . Total revenue growth of 26.1% for the quarter compared to prior year reflected the results of our previously announced diversification strategy that is helping deliver a balanced portfolio growth . This paper aims to investigate whether revenue diversification affects the financial sustainability of microfinance institutions (MFIs).,The study uses a worldwide panel data set of 443 MFIs in 108 countries for the period 2013-2018 and two-step system Generalized Method of Moments estimation model.,The study finds that revenue diversification has a significant and positive effect on the . Revenue diversification strategically boosts your business stability, health, and financial strength to withstand market fluctuations, capture untapped cash flow and build a marketable business. CSU business schools recognize the need for revenue diversification strategies and are finding ways to . However, studies that focused on revenue diversification strategy's potential among public universities are yet to be proven. organizations with annual revenue greater than US$1 billion. Revenue diversification is a key strategy pursued by the banks to stabilize their earnings profile and improve the profitability across the globe. For governmental entities, the purpose of diversification is to collect revenue from a combination of tax sources with varying degrees of volatility so as to diversify away instability by selecting a combination of taxes that will generate a given level of revenue while minimizing the level of instability ( White 1983 ). Mitigate Risk. Of course, this is not without risk but the gains can be worth it. However, studies that focused on revenue diversification strategy's potential among public universities are yet to be proven. Make sure your board and leadership understand the importance of revenue diversification - and embrace the need to seek out new sources and combinations of funding. Hence, bank revenue diversification strategies are expected to add stability to the banks' earnings and strengthen the balance sheet. The investors have made up their mind that bigger is better. Deciding on a Focus: The Process of Selecting a Revenue Diversification Strategy •Failure to link strategic diversification to strategic plan can result in short-term gain & long-term pain 16 What is the Difference Between St t i Pl i & M k ti Pl i ?Strategic Planning & Marketing Planning? A revenue diversification strategy is one potential method leaders can use to amass funding sources (e.g., grants, donations, and investment income), minimize vulnerability, and strengthen the financial health of an NPO (Carroll & Stater, 2009; Chang & Tuckman, 1991; Mayer, Diversifying your streams of revenue could save your nonprofit from completely losing its footing amid an economic downturn, health crisis, or shift in political policy. Therefore, in this study, we examined the impact of NII (at aggregate as well as component-wise) on profitability and risk of Indian banks over a long period, viz. This article focuses on Romanian NGOs and its main goal is. The concept of revenue diversification appeared in a study about the . Domestic network posted 18.2%, ACMI posted 26.6% and the Charter business posted 54.6% growth . Advantages of Diversification Strategy More Revenue & Sale. What diversification means Diversification is the act of investing in a variety of different industries, areas, and financial instruments, to. Our research findings suggest that many opportunities lie ahead for health care organizations—as well as their strategy leaders. Thus, this study examined the effect of revenue diversification on the . Revenue Diversification Strategy Continues to Deliver Mississauga, ON, March 7, 2022 - Cargojet Inc. ("Cargojet" or the "Corporation") (TSX: CJT) announced today financial results for the fourth quarter and year ended December 31, 2021. Dominant business: Between 70% and 95% of revenue comes from a single business. The top reasons why you want to have multiple streams of income in your business: 1. My recommendation is to avoid one client or revenue source making up more than 25% of your monthly revenue. Diversification strategy is one of the four main strategies for growth identified by Igor Ansoff in 1957, which enables companies to look at other markets they could tap into, or new products they could launch to increase their reach and revenue. Recent economic events have shown us how important it is to diversify revenue and not be dependent on just one source of income. The theory's central proposition is that investors can maximize the expected return rate and minimize risk by choosing the right combinations of various assets in the portfolio. Product diversification is a strategy employed by a company to increase profitability and achieve higher sales volume from new products. Diversification can occur at the business level or at the corporate level. Retaining existing customers will always be more cost effective than acquiring new customers, which makes it an obvious revenue growth strategy. 1. Withstanding economic downturns. The future of revenue diversification will be. (first, what is the question?) Shifting marketing emphasis from customer acquisition to retention. The contribution of income from non-traditional sources has increased in the recent past. Figure 1 Effect on sales team compensation and performance objectives. Companies should look to pursue other growth strategies first, and only consider diversification once their current product or current market no longer offers opportunities for further growth. You begin to rely on that fixed income stream and you're more reluctant to tackle fresh opportunities, not wanting to risk falling. This article examines the effects of three major revenue strategies in nonprofit organizations. My Personal Diversification Strategy. A revenue diversification strategy is one potential method leaders can use to amass funding sources (e.g., grants, donations, and investment income), minimize vulnerability, and strengthen the financial health of an NPO (Carroll & Stater, 2009; Chang & Tuckman, 1991; Mayer, Data and revenue diversification dominate publisher strategies. revenue sources (Chikoto-Schultz & Neely, 2016; Hung & Hager, 2019). When you add multiple streams of revenue, you lessen your business dependence on any single stream of revenue. Moderate to High Levels of Diversification A company that pursues a high level of diversification uses either of the following diversification strategies: Related constrained: Less than 70% of revenue comes from the dominant business, and all businesses share product, technological, and distribution linkages . Intelligent business owners diversify their revenue. The concept of revenue diversification (RD) is grounded on Markowitz's (1952) Modern Portfolio Theory. Thus, this study examined the effect of revenue diversification . • Set an aggressive ambition. You can't eliminate risk, but you can mitigate it by being prepared. Evolving resource dependence is demonstrated by the shifting reliance on each source of funds: private contributions, government funding, and commercial activities. Based on our global and regional experience, we recommend five key success factors to secure when planning revenue diversification. 1-2 rotating projects (such as SEO audits or site migrations). 2.2 The revenue diversification strategy . Retaining existing customers will always be more cost effective than acquiring new customers, which makes it an obvious revenue growth strategy. We have worked with a leading university in the GCC to tailor its approach to revenue diversification. Diversification is a strategy for growth through branching out into a new market segment, allowing your business to expand its presence and occupy a totally new space. Total revenue growth of 26.1% for the quarter compared to prior year reflected the results of our previously announced diversification strategy that is helping deliver a balanced portfolio growth where each line of business is a strong contributor. My current diversification strategy looks like this: 3-4 monthly retainers. Rethink the need and best use of office space. Business-level product diversification - Expanding into a new segment of an industry that the company is already operating in. - Increased focus on customer experience. (first what is the Is diversification the answer? Revenue diversification requires a long-term strategy that includes planning, ongoing cultivation and plenty of patience. Diversification is your safety net. Resource dependency theory asserts that revenue diversification is a prudent strategy for non-profit organisations to mitigate their financial challenges. 1999-2020. If done properly, diversification can increase profit and bring growth. Nonprofit Quarterly's Mark Hager and Chiako Hung have co-authored an article highlighting the positives and negatives of nonprofits maintaining revenue diversification. Visit the Nonprofit Quarterly website to read the article. It's easy to become complacent when the revenue is flowing in. Total Revenues for the quarter were $235.9 million compared to fourth quarter 2020 Revenues of $187.1 million. If an industry or sector is facing a downturn and sales start to decline; as a . While having a diversified portfolio sounds like a safer approach to good financial standing, it is not always the case. 1. . The university was previously less than 1% revenue diversified; we identified the potential for 10% revenue diversification and prepared a quick-win initiative representing 3% to 4% revenue diversification that is now being implemented. A wide-ranging literature review is condensed into summary profiles comparing revenue volatility, goal displacement, process, and . Primarily if the company has gathered enough customer shares, there would be little room left for improvement. That said, there are three clear benefits of diversification. As a result, revenue diversification is the only strategic option that presents a significant opportunity for increasing university income. Here are three strategies that University of Utah Health is using to diversify its revenue. The benefit of having more than one income stream is when one income. Shifting marketing emphasis from customer acquisition to retention. It can also be used to improve the experience of the customer and manage cost. We have worked with a leading university in the GCC to tailor its approach to revenue diversification. Diversifying revenue is an ongoing process that can yield early as well as long-term benefits to GCC universities.

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