What is an example of related diversification? (2024)

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What is the example of related diversification?

Related diversification occurs when a firm moves into a new industry that has important similarities with the firm's existing industry or industries (Figure 8.1). Because films and television are both aspects of entertainment, Disney's purchase of ABC is an example of related diversification.

(Video) Diversification Strategy (With Real World Examples) | From A Business Professor
(Business School 101)
Which one of the following is the best example of related diversification?

Which of the following is the best example of related diversification? stem from cost-saving strategic fits along the value chains of related businesses.

(Video) Business Diversification
(GreggU)
What is an example of a diversified company?

Diversified Companies in Practice

Some of the historically best-known diversified companies are General Electric, 3M, Sara Lee, and Motorola. European diversified companies include Siemens and Bayer, while diversified Asian companies include Hitachi, Toshiba, and Sanyo Electric.

(Video) Related diversification or integration strategy: Vertical, Horizontal and Concentric diversification
(Firm Strategy & Management)
What are the 3 diversification strategies?

There are three types of diversification techniques:
  • Concentric diversification. Concentric diversification involves adding similar products or services to the existing business. ...
  • Horizontal diversification. ...
  • Conglomerate diversification.
1 Feb 2022

(Video) Related Diversification
(Dr. Sandipkumar G. Prajapati)
What is a related linked diversification strategy quizlet?

Related linked diversification strategy. Is where the firm with a portfolio of businesses have only a few links between them. Share fewer resources and core competencies between them then related constrained firms.

(Video) Related Diversification
(Raul Romero)
Which of the following is the best example of unrelated diversification?

Which of the following is the best example of unrelated diversification? A producer of mens apparel acquiring a maker of golf equipment.

(Video) Strategic Diversification (Related and Unrelated)
(Dr. D University)
What are the benefits of related diversification?

Related diversification helps companies move into a market that closely connects to their existing operations. Through this strategy, companies can increase the potential to increase their benefits. If companies operate independently, they may not achieve the same results.

(Video) Chapter 10 Corporate Level Strategy Related and Unrelated Diversification
(Lauren Regondola-Bolata)
What makes related diversification an attractive strategy is?

▪ What makes related diversification an attractive strategy is the. opportunity to convert cross-business strategic fits into a competitive. advantage over business rivals whose operations do not offer. comparable strategic fit benefits. ▪ The greater the relatedness among a diversified company's sister.

(Video) Unrelated diversification or conglomerate strategy of the firm
(Firm Strategy & Management)
Which of the following is an important appeal of a related diversification strategy quizlet?

Which of the following is an important appeal of a related diversification strategy? Offers opportunities to transfer skills, expertise, technical know-how, or other capabilities from one business to another.

(Video) What are Diversification Strategies , Types and examples in Urdu/Hindi
(Lectures by Tahira)
What is an example of unrelated diversification?

Most unrelated diversification efforts, however, do not have happy endings. Harley-Davidson, for example, once tried to sell Harley-branded bottled water. Starbucks tried to diversify into offering Starbucks-branded furniture. Both efforts were disasters.

(Video) Diversification: Concentric and Conglomerate Strategies
(Galton College)

What is product diversification with example?

The manner in which a product is presented can be altered to make it available to a different audience. For example, a household cleaning product could be repackaged and sold as a cleaning agent for automobiles.

(Video) Related and Unrelated Diversification Strategies
(Semih Ceyhan)
What is diversification and why company diversify give an example?

A company may decide to diversify its activities by expanding into markets or products that are related to its current business. For example, an auto company may diversify by adding a new car model or by expanding into a related market like trucks.

What is an example of related diversification? (2024)
What are the two types of diversification strategy?

The three main diversification strategies are based on the approach undertaken – concentric, horizontal, and conglomerate diversification.
  • #1 – Concentric diversification. This method introduces closely related products to the existing market. ...
  • #2 – Horizontal diversification. ...
  • #3 – Conglomerate diversification.

What is diversification strategy in business?

What is diversification? Diversification is a business development strategy in which a company develops new products and services, or enters new markets, beyond its existing ones. Diversification strategy can kick-start a struggling business, or it can further extend the success of already highly profitable companies.

What are the different methods of diversification?

There are six established types of diversification strategies:
  • Horizontal diversification.
  • Vertical diversification.
  • Concentric diversification.
  • Conglomerate diversification.
  • Defensive diversification.
  • Offensive diversification.

What is related diversification and unrelated diversification?

Generally, related diversification (entering a new industry that has important similarities with a firm's existing industries) is wiser than unrelated diversification (entering a new industry that lacks such similarities).

What are the two ways an unrelated diversification strategy can create value through financial economies?

Unrelated diversification can create value through two types of financial economies: efficient internal capital market allocation and restricting a firm's assets.

What is the shape of the relationship between the level of diversification and performance?

Strategic management scholars have argued for an inverted U-shaped relationship between levels of diversification and firm performance (Rumelt, 1974).

Which of the following is the best example of unrelated diversification quizlet?

which of the following is the BEST example of unrelated diversification? a producer of men's apparel acquiring a maker of golf equipment.

Which of the following is most likely to be an important advantage of unrelated diversification?

An advantage of unrelated diversification is that competencies can be shared and leveraged throughout the value chain activities. 15. An appropriate reason to diversify is to pool the risk from several business ventures in order to create a more stable income stream.

Is Disney related or unrelated diversification?

The Walt Disney Company (Disney) utilizes a related diversification strategy. Related diversification “involves diversifying into businesses whose value chains possess competitively valuable 'strategic fits' with value chain(s) of [a] firm's present business(es)” (Geiger, 2004).

What are the pros and cons of related diversification?

Advantages and Disadvantages of Portfolio Diversification
AdvantagesDisadvantages
1. Risk management2. Align with your goals3. Growth opportunity1. Increases chances of mistakes2. Rules differ for each asset3. Tax implications & cost of investment4. Caps growth
13 Dec 2021

How does diversification create value for a company?

A company following a diversification strategy can create value for its shareholders only when the combination of the skills and resources of the two businesses satisfies at least one of the following conditions: An income stream greater than what could be realized from a portfolio investment in the two companies.

What are the three 3 reasons firms choose to diversify their operations?

There are four most often cited reasons for diversification: the internal capital market, agency problems, increased interest tax shield and growth opportunities.

What key factors need to be considered when a firm is considering diversification?

There are certain factors that you must look into before proceeding with the diversification strategy;
  • Financial sense. Many people believe in taking more significant risks to achieve higher returns and hence step into diversification. ...
  • Core competencies of the firm. ...
  • Evaluating the assets. ...
  • The right expertise and resources.

Which of the following most accurately defines related businesses?

Which of the following most accurately defines related businesses? The businesses use an overlapping marketing strategy targeting essentially the same customer groups. The businesses depend on the same set of suppliers for key materials and inputs.

What is related to diversification or establishing a new plant?

There are several grounds for choosing related diversification strategy: It has the potential of cross-business synergies. Value chain relationships between the core and new businesses produce the synergies.

Which of the following is a way an organization can leverage important resources quizlet?

Which of the following is a way an organization can leverage important resources: Harvesting resources.

What are the 3 tests for judging whether a particular diversification move can create value for shareholders?

What are the three tests for judging whether a particular diversification move can create value for shareholders? The attractiveness test, the cost-of-entry test, and the better-off test.

How would you explain the difference between a one business company and a diversified company quizlet?

In terms of strategy making, what is the difference between a one-business company and a diversified company? A. The first uses a business-level strategy, while the second uses a set of business strategies and a corporate strategy.

When should a company choose related diversification?

A company is likely to choose related diversification when it wants to benefit from transferring competences, leveraging competences, sharing resources and/or bundling resources.

What is unrelated diversified company?

Meaning of Unrelated Diversification. Unrelated diversification involves entering into new businesses that are not related to the core business of the company. An unrelated diversified company has, under a single corporate umbrella, more than one business- units which operate their activities in different industries.

What is the purpose of unrelated diversification?

Unrelated diversification allows companies to expand operations. Instead of focusing on similar markets, it helps companies exceed their existing areas. Therefore, they do not focus on similar products, markets or customers.

What is an example of diversification?

Concentric diversification refers to the development of new products and services that are similar to the ones you already sell. For example, an orange juice brand releases a new “smooth” orange juice drink alongside it's hero product, the orange juice “with bits”.

Which of these is a good example of diversification?

Answer and Explanation: 1) Which of the following is an example of diversification : The correct answer is e) Market expansion.

What is an example of a diversified investment?

Important points of the Diversified Investments

Fixed assets, equity (equity investments, equity-linked savings schemes), real estate, commodities (gold, silver, bronze), cash and cash equivalents, derivatives (equity, bonds, debt), and alternative investments such as hedge funds and bitcoins are examples.

What is an example of a diversified company?

Diversified Companies in Practice

Some of the historically best-known diversified companies are General Electric, 3M, Sara Lee, and Motorola. European diversified companies include Siemens and Bayer, while diversified Asian companies include Hitachi, Toshiba, and Sanyo Electric.

What are the 3 forms of diversification?

There are three types of diversification: concentric, horizontal, and conglomerate.

What is a related linked diversification strategy quizlet?

Related linked diversification strategy. Is where the firm with a portfolio of businesses have only a few links between them. Share fewer resources and core competencies between them then related constrained firms.

Why is diversification important in business?

Diversification is a risk-reduction strategy used by businesses to help expand into new markets and industries and achieve greater profitability. This can be attained by diversifying new products and services in new markets, targeting new customers and increasing profitability.

Which of the following is best example of unrelated diversification?

Which of the following is the best example of unrelated diversification? A producer of mens apparel acquiring a maker of golf equipment.

What do you mean by diversification?

the practice of varying products, operations, etc, in order to spread risk, expand, exploit spare capacity, etc. 2. (in regional planning policies) the attempt to provide regions with an adequate variety of industries. 3. the act of diversifying.

Why is diversification important?

Diversification is a technique that reduces risk by allocating investments across various financial instruments, industries, and other categories. It aims to minimize losses by investing in different areas that would each react differently to the same event.

What is product diversification with example?

The manner in which a product is presented can be altered to make it available to a different audience. For example, a household cleaning product could be repackaged and sold as a cleaning agent for automobiles.

How do you manage diversification?

7 Tips to Manage Diversity in the Workplace
  1. Stop Thinking of Diversity as a Buzzword. ...
  2. Make Diversity Part of Your Hiring Process. ...
  3. Build Connections to Create Talent Pipelines. ...
  4. Make Sure Leadership Is Aligned with Your Goals. ...
  5. Examine Your Policies to Fight Systemic Inequality. ...
  6. Create a Culture of Empathy and Forgiveness.
24 Jul 2019

How do you measure diversification?

The correlation coefficient is calculated by taking the covariance of the two assets divided by the product of the standard deviation of both assets. Correlation is essentially a statistical measure of diversification.

Which is the example of related diversification Mcq?

Related diversification occurs when a firm moves into a new industry that has important similarities with the firm's existing industry or industries. Because films and television are both aspects of entertainment, Disney's purchase of ABC is an example of related diversification.

What is product diversification with example?

The manner in which a product is presented can be altered to make it available to a different audience. For example, a household cleaning product could be repackaged and sold as a cleaning agent for automobiles.

What are the examples of horizontal diversification?

Because shoes are different products than shirts, bottoms or dresses, this is an example of horizontal diversification, as the same customers who purchase the company's clothing might be inclined to also purchase shoes from their stores.

Is Disney related or unrelated diversification?

The Walt Disney Company (Disney) utilizes a related diversification strategy. Related diversification “involves diversifying into businesses whose value chains possess competitively valuable 'strategic fits' with value chain(s) of [a] firm's present business(es)” (Geiger, 2004).

What do you mean by diversification Mcq?

"The 'diversification strategy' is used to gain market share in" MCQ PDF on diversification strategy with choices current product in current market, new products for new markets, new products in new market, and new products in current markets for online business administration degree classes.

What is the purpose of diversification Mcq?

Diversification aims to maximize returns by investing in different areas that would each react differently to the same event.

Which is an example of business level strategy Mcq?

Explanation: Low cost, differentiation and concentration are examples of business strategies.

How is diversification used in business?

Diversification is a risk-reduction strategy used by businesses to help expand into new markets and industries and achieve greater profitability. This can be attained by diversifying new products and services in new markets, targeting new customers and increasing profitability.

How can companies benefit from related diversification?

One of the key advantages of related diversification is the ability to share key resources across different areas. Key resources and capabilities of the firm can be utilized in a new area – potentially giving the firm a competitive advantage relative to other firms that may not pose comparable resources.

What is related and unrelated diversification?

Generally, related diversification (entering a new industry that has important similarities with a firm's existing industries) is wiser than unrelated diversification (entering a new industry that lacks such similarities).

What is vertical diversification example?

This means vertical diversification usually means buying out either a supplier or a customer. For example, a soda manufacturer could vertically diversify by buying an aluminum manufacturer or a company that installs and maintains vending machines.

What is the example of horizontal and vertical integration?

Horizontal integration helps acquire control over the market, but vertical integration helps gain control over the whole industry. Example: The Heinz and Kraft Foods merger is an example of horizontal integration.

What are some examples of vertical integration?

Vertical integration involves acquiring or developing one or more important parts of a company's production process or supply chain. For example, Netflix's shift from licensing shows and movies from major studios to producing its own original content is an example of vertical integration.

What is Walt Disney's diversification plan?

The Walt Disney Company has diversified following a similar strategy, expanding from its core animation business into theme parks, live entertainment, cruise lines, resorts, planned residential communities, TV broadcasting, and retailing by buying or developing the strategic assets it needed along the way.

Was Disney's diversification plan successful?

Walt Disney Company strategy of diversification has helped grow its business in overseas market. Between 1988 and 1996 revenues grew from $3.4 billion to over $12 billion with the most growth coming from films and its consumer products.

How do firms create value when using a related diversification?

The firms can create value by using related diversification strategy through operational relatedness and corporate relatedness. Under operational relatedness the firm share its activities; whereas, under corporate relatedness the firm relocate its core competencies.

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