Overspecialisation happens when a company focuses too much on a small range of products or customers, limiting its ability to adapt and diversify.

Narrow Product or Service Range: When a business focuses on only a few products or services, it struggles to meet various customer needs. This limitation can prevent the company from entering new markets and diversifying, which affects its long-term growth and competitiveness.

Dependence on a Few Customers: When a business depends on just a few customers, it risks being affected by their changing preferences or financial issues. This reliance makes the business vulnerable to shifts in the industry or economy.

Reliance on Limited Suppliers: Depending on a few suppliers exposes a business to supply chain problems. If one supplier has issues, it significantly impacts the business, causing delays or quality problems.

Lack of Diversification: A lack of diversity in products, customers, or suppliers weakens a business's ability to handle market changes. Relying too much on a narrow customer base or specific conditions makes it vulnerable to industry or economic shifts.

Stifled Innovation: When a business dominates a small market, it can become too comfortable. This focus on its current products and services can make it less innovative and slow to develop new offerings.

Kodak dominated photography but went bankrupt in 2012 by focusing too much on film and not adapting to digital cameras fast enough. Its narrow product range and unwillingness to diversify led to its downfall.

Blockbuster was once a leading video rental service but became too focused on physical stores. As customers shifted to digital streaming, Blockbuster failed to adapt, leading to its bankruptcy in 2010 while Netflix thrived.

Borders, a major book retailer, focused mainly on physical stores and failed to adapt to e-commerce and digital books. This narrow focus led to its closure in 2011, unable to compete with online giants like Amazon.

Back to unit 5 homepage