I need help answering the following assignment regarding Diversification:
Explore the websites of the following companies and determine whether the company is pursuing a strategy of related diversification, unrelated diversification, or a mixture of both:
- Berkshire Hathaway
- News Corporation
- Dow Jones & Company
Diversification strategies are used to expand a company's operations by adding markets, products services or stages of production to the original company (www.enotes.com). Diversification is a type of growth strategy to increase the company's performance objectives (normally through sales or market shares) (www.enotes.com). The reason that companies' use growth strategies is that investors and executives believe that bigger is better (www.enotes.com). Growth can improve the effectiveness of a company and larger companies have several advantages over smaller companies. Some of the advantages that larger companies have over smaller ones are market share can lead to economies of scale (The increase in efficiency of production as the number of goods being produced increases (www.investopedia.com), produce lower costs, produce lower average unit cost by spreading administrated overhead cost over a larger unit volume, improve the linkage of all of the stages of production, information gained in one business can be applied to problems of other parts of the business, and taking advantages of geographic differences (www.enotes.com). There are two ways that companies can diversify and they are related (concentric) and unrelated (conglomerate) (www.enotes.com). Related diversification is the strategy that a company uses when adding related products (expands its existing line of products or markets) or markets to the company to reach a strategic fit (www.enotes.com). Unrelated diversification is the strategy that a company uses when adding unrelated products (adds new types of products or markets) or markets to their line of business when the company's line of business is ...
Diversification for Berkshire Hathaway is examined.