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What is Unrelated Diversification Strategy?

 
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Unrelated differentiation is a diversification strategy where companies expand their operation into markets or products beyond current resources and capabilities. This strategy is also sometimes referred to as the conglomerate strategy.

The unrelated diversification seems to be applicable and meaningful in at least two cases:

Firstly, if the parent company is able to provide different businesses with managerial knowledge and expertise that strengthens the individual business, it will be very feasible to diverse into different markets that will potentially increase parent company profits.

Secondly, unrelated diversification might give a company the oppurtunity of increasing the strength of the economy of different markets, and to develop competencies that can be shared between different markets and products.

 
 
 
 
 
Date Created: 2010-12-11
Posted by: Admin
 
 
 

Related resources:

What is Michael Porter's 5 forces?
Internationalization of Multinational Corporations
Global strategies for MNCs: Christopher A. Bartlett & Sumantra Ghoshal
What is the Balanced Scorecard?
What is the BCG Matrix?
What is a SWOT analysis?
What is Michael Porter's Diamond Model?
Reference(s)
 
Exploring Coorporate Strategy
Johnson, Gerry. Scholes, Kevin Richard Whittington: (2006); Prentice Hall
Keywords:
Online MBA, Online MBA Courses, Unrelated diversification, diversification, conglomerates, management logic, knowledge sharing

 


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