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Terms in this set (7)

Related Diversification - Related diversification involves sharing or transferring specialized resources and capabilities. Diversifying the company into new business units that have a strong strategic fit with the company's existing business units. Strategic fit exists whenever one or more activities constituting the value chains of different businesses are sufficiently similar to present opportunities for cross-business sharing. An example would be Disney and how they incorporated the acquisition of Marvel comics in their amusement parks.

Unrelated Diversification - Businesses are said to be unrelated when the resource requirements and key value chain activities are so dissimilar that no competitively important cross-business commonalities exist. Companies that pursue a strategy of unrelated diversification often exhibit a willingness to diversify into any business in any industry where senior managers see an opportunity to realize consistently good financial results. This is often performed by acquiring an existing company.

Combination Related Diversification - A combination of the two strategies. A number of multi-business enterprises have diversified into unrelated areas but have a collection of related businesses within each area—thus giving them a business portfolio consisting of several unrelated groups of related businesses. Combination related-unrelated diversification strategies have particular appeal for companies with a mix of valuable competitive assets, covering the spectrum from general to specialized resources and capabilities.