Related Diversification - a development beyond the existing product or market, but one that still sits within the same broad industry
Unrelated Diversification - where the organisation moves beyond the boundaries of its existing industry
It is possible to pursue different degrees of diversification. This can be evaluated by assessing the percentage of total revenue attributable to a single business.
Wrigley's - not very diversified. Siemens - very diversified.
Creation of value through diversification is achieved through economies of scope. Synergy exists when the value created by business units working together exceeds the value those units create working alone. The whole is greater than the sum of the parts. This can be difficult to realise in reality.Relates closely to the discussion of resources and capabilities.
No comments:
Post a Comment
Comments are moderated before posting.