Question

In: Economics

Describe the “number of businesses” cost of the diversification strategy.

Describe the “number of businesses” cost of the diversification strategy.

Solutions

Expert Solution

ans....
Many organization believes that when reaching at the peak of the business growth and no other option or opportunity remains with the organization to move forward, they think about diversifying. Hence, an organization diversified in various business segments and markets. Also, by introducing new product or getting into new market.
Diversification has been risk minimizing strategy for a business and does not influence business negatively. For example, if one of the business is getting into loss then other business which is doing good in the market can counterbalance the losses. There are two types of strategies used
(a) Concentric, which is called as related diversification that means diversification in the same business. This helps in keeping the senior executive aligned based on the strategic plan by retaining knowledge and skills in good ways.
(b) Conglomerate, which is called as non-related diversification and used in two or more different business lines. This helps in neutralizing the effect of more matured business to the immature one. Also, knowledge and skills can be shifted to the other business to achieve strategic goals.
Many organizations use diversification strategy to minimize the risk by maximizing the returns by having a good spread of investment instruments in different places to achieve long-term financial goal.


Related Solutions

There are three approach of business level strategy : diversification strategy, cost leadership strategy and and...
There are three approach of business level strategy : diversification strategy, cost leadership strategy and and focus strategy. Please explain what is diversification strategy and cost leadership strategy and give example in coffee industry in Indonesia. (30 points
Describe Xiaomi corporation's diversification strategy. What type of diversification strategy is Xiaomi Corporation pursuing? Explain. (USE...
Describe Xiaomi corporation's diversification strategy. What type of diversification strategy is Xiaomi Corporation pursuing? Explain. (USE YOUR OWN WORDS: at least 400 words)
Explain the factors that influence expansion strategies:concentration strategy or diversification strategy.
Explain the factors that influence expansion strategies:concentration strategy or diversification strategy.
There are three approach of corporate strategy, that is : portfolio strategy, BCG Matrix, and diversification...
There are three approach of corporate strategy, that is : portfolio strategy, BCG Matrix, and diversification strategy The Indofood company bought the ownership of PT Indolakto (Indomilk), what approach of corporate strategy? Please explain your answer using references about approach of corporate strategy.
How is profit generally achieved with an unrelated diversification strategy
How is profit generally achieved with an unrelated diversification strategy
Diversification is the process of firms expanding their operations by entering new businesses. As a strategist,...
Diversification is the process of firms expanding their operations by entering new businesses. As a strategist, critically discuss some of the various means that firms can use to diversify. What are the Advantages and disadvantages associated with each of these? Support your answer with examples.
Q) Diversification is the process of firms expanding their operations by entering new businesses. As a...
Q) Diversification is the process of firms expanding their operations by entering new businesses. As a strategist, critically discuss some of the various means that firms can use to diversify. What are the Advantages and disadvantages associated with each of these? Support your answer with examples.
Briefly explain the importance of international expansion as a viable diversification strategy.
Briefly explain the importance of international expansion as a viable diversification strategy.
1. Discuss differences between Corporate Strategy and Business Strategy 2. Reasons for diversification and challenges of...
1. Discuss differences between Corporate Strategy and Business Strategy 2. Reasons for diversification and challenges of diversification
Under what conditions will a related diversification strategy not be a source of competitive advantage for...
Under what conditions will a related diversification strategy not be a source of competitive advantage for a firm? Instructions Write a paper addressing the question of related diversification strategies and competitive advantage. Your paper should be at least 300 words long. Reference sources used to support answer.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT