SGMT 3000 Lecture 10: 10. CH10 (Corporate Level Strategy - Related and Unrelated Diversification)
9 May 2016
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Differentiate between multibusiness models based on related and unrelated diversification. Explain the five primary ways in which diversification can increase company profitability. Discuss the conditions that lead managers to pursue related diversification versus unrelated diversification and explain why some companies pursue both strategies. Describe the three methods companies use to enter new industries internal new venturing, acquisitions, and joint ventures and discuss the advantages and disadvantages associated with each of these methods. Diversification: the process of entering new industries, distinct from a company"s core or original industry, to make new kinds of products that can be sole profitably to customers in these new industries. 5 key benefits of diversification: transferring competencies. Taking a distinctive competency developed by a business unit in one industry and implanting it in a business unit operating in another industry. Commonality: skill or competency that when shared by two or more business units allows them to operate more effectively and create more value for customers.
