Using what you know on multinational enterprises (MNE), explain why and how an MNE would use diversification strategies to grow their business. How would this benefit the company? What strategies would be the best to use? What (if any) would be the downside to such strategies for both the MNE and the countries that they operate in?
In your explanation, use at least one real company to demonstrate the use of diversification strategies to support your answer.
MNEs may use diversification strategies to grow their business as a way to expand market base, brand visibility, increase profits, and reach new consumers. Diversification can also help a company source material or product know-how, rather than growing it from within or continuing to purchase from outside of the company. This can be seen in clothing companies who enjoy the ability to manufacture product oversees (cheaper costs) but are interested in better control of the process to avoid human rights and safety concerns. Diversification can also serve to add new businesses, ...
This detailed solution discusses MNE's use of diversification strategies to grow their business and how this benefits the company. It suggests the best strategies would to use and any downsides to these strategies for both the MNE and the countries that they operate in. Includes examples.