CORPORATE STRATEGY

CHAPTER 8

DIVERSIFICATION AND THE MULTIBUSINESS COMPANY 

WHAT DOES CRAFTING A DIVERSIFICATION STRATEGY ENTAIL?

1.       Step 1 Picking new industries to enter and deciding on the means of entry.

2.       Step 2 Pursuing opportunities to leverage cross-business value chain relationships and strategic fit into competitive advantage.

3.       Step 3 Establishing investment priorities and steering corporate resources into the most attractive business units.

4.       Step 4 Initiating actions to boost the combined performance of the cooperation’s collection of businesses.

STRATEGIC DIVERSIFICATION OPTIONS

 

WHEN BUSINESS DIVERSIFICATION BECOMES A CONSIDERATION

A firm should consider on it when:

1.      it can expend it business into whose technologies and product complement its present business

2.      -its recourse capabilities and resources can be competitive values to another businesses

3.      -the costs can be reduced by using cross-business to transfer its capabilities and resources

4.      -transferring a strong brand name to the product of other business help drive up sales and profit.

CORE CONCEPT

♦      Creating added value for shareholders via diversification requires building a multibusiness company where the whole is greater than the sum of its parts—an outcome known as synergy.

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