1. Carefully explain the difference between a strategy of related diversification and a strategy of unrelated diversification.
2. What is meant by the term strategic fit? What are the advantages of pursuing strategic fit in choosing which industries to diversify into?© BrainMass Inc. brainmass.com October 25, 2018, 7:14 am ad1c9bdddf
Under related diversification, firms develop internally or go for acquisition of firms that have similar kind of business (Cant, Strydom, Jooste & du Plessis, 2009). It means, the products and markets are of similar kind, so the firms can gain advantage of synergy effects in terms of operational efficiency, research and development, brand name and marketing fields. In unrelated diversification, firms expand into unrelated business fields. In other words, the products and markets are totally unrelated form firms, so they may also fail. In related diversification, competencies are shared at high level. In contrast, in unrelated diversification, competencies are shared at low level.
Related diversification boosts profitability to high extent, while unrelated diversification does not boost profitability at high extent. In related diversification, firms can increase more values (Hill & ...
The strategies of related and unrelated diversification are examined. The term strategic fit is defined.
What does it mean for a firm to be "diversified"? Is the Coca-Cola Bottling Company diversified because they sell Coke and Sprite--a cola brand and a clear soda brand? what are some examples of companies that have a diversified strategy.
How do related and unrelated diversification strategies differ? Must companies approach diversification differently when their strategy calls for unrelated diversification? What are some examples of companies pursuing related and unrelated diversification?