Arvind, CEO of Stellar Electronics Ltd., decided that instead of depending only on consumer appliances, the company should enter the renewable…

The decision taken by Arvind reflects the diversification strategy, which is a corporate-level strategy. Corporate level strategy is concerned with the choice of business, direction and scope of the organization as a whole. It addresses the fundamental issue of what businesses the organization should be in and how the overall business portfolio should be managed to achieve growth and stability. Diversification strategy involves entry into new products or businesses that are different from the firm's existing operations. It is adopted to achieve growth, reduce risk arising from dependence on a single business and exploit new opportunities in the environment. In the given case, Stellar Electronics Ltd., which was earlier operating in consumer appliances, proposes to enter the renewable energy equipment business such as solar panels and batteries by creating a new division. This represents expansion into a new business area beyond its present product line with the objective of long-term growth and risk reduction. Thus, the company is broadening its business portfolio by adding a new business, which is characteristic of diversification at the corporate level. Hence, the corporate strategy reflected is diversification strategy.