Introduction
Diversification is when a company in involved in two or more lines of business. Strategic diversification is the sometimes maligned attempt, to use strategic decisions to unify multi-industry practices into a single corporate strategy. It is a vision that the corporation management have, to align its goals and objectives, its organisational structure, its systems and processes and make a choice on the acquisitions that would best suit the resources and scope of the business to give it a corporate advantage, usually over a longer period of time, hence the risk element. In this essay I will discuss the techniques and theories behind corporate diversification and the results and risks of these strategies.
The decision to diversify
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A company shouldn't diversify unless it runs out of growth in the core business and until it has ass the necessary strategic assets to ensure success. Profit is widely considered to be the driving motive behind all economic activity in the economic market (Mueller, 2003) and profit is based on uncertainty, but profit and value are two differently quantifiable metrics. Schumpeter (1934) dismissed this notion of uncertainty and claimed profit were created by the innovations introduced by the entrepreneur. This risk and uncertainty ‘gambled’ against profits, is the biggest barrier to diversification and the proactive thinking behind the low-cost model of business that so many companies have …show more content…
This can be a double edged sword as regard risk and the unification of the corporate skill base. The value chain between these two businesses may be unrelated and it could cost a lot to get these businesses from the dog status to making money. It also splits management and capital decisions into separate and mostly unrelated groups also. One example of this type of unrelated diversification is Virgin owned by Richard Branson. The Schumpeter theory of entrepeneurs and their innovation being the driving force behind profits, is perfectly exemplified by the business practices of Richard Branson. With travel, telecommunications and even food stuff under his corporate umbrella, Virgin isn't afraid to take risks and uses the entrepreneurial attitude on a large scale to great
Every company has internal and external forces that effect how they operate within the community in which they are located and also within their own walls. These internal and external forces play a strong impact on the company’s profitability and success. These forces have an effect on what consumers they attract or ignore and how they are perceived by those who have the buying power. A mistake any analyzing and implementing measures to assist with these factors could greatly affects a company’s bottom line and success. This is why any company wanting to grow and be successful will need to take all of these forces; sociocultural, technological, economic, environmental and political-legal into consideration in creating their strategic plan.
Craig Hospital have significant mission, vision, and value that attract vast of citizens and allow them to succeed, achieving top ten rehab hospital in the nation. Nevertheless, Craig Hospital is in need for better strategy to support its decision logic of strategy formulation and strengthen the hospice markets as well as minimizing the risks of leveraging the resources they already possess. Diversification strategy is a great support strategy that assist the strategy formulation as it holds the key to controlling the hospital, market position, and long-term economic viability. There are two type of diversification; related diversification that focus on product and service, while unrelated diversification is more of creating a “portfolio” that
The major issues facing the company comprises of there being multiple businesses with different demands. There are separate levels of performance and success as well as growth chances for each of the sector and the firm needs to tackle with issues in each of these divisions (Dube, J.P., 2004).
And finally LVMH diversification strategy (Bernard Arnault) is making acquisitions outside the company’s sector. In sector where they don’t have the “know-how” and don’t match the company Image. The current CEO (Arnault Bernard) is also the major shareholder which makes him easier to make decisions on new acquisitions
...ative aspects of diversification, for example through better corporate planning, human recourse management and reaching further synergies between its various business lines.
In fact, diversification is often a suitable corporate strategy when a company has a strong competitive position on the market, but its existing industry is not attractive enough. Or when the business consolidates and becomes mature having reached the limits of growth, most of the companies decide to expand their market or product lines. The first reason to diversify the product line for Rocol Company was to reduce competition within the single industry due to changes in environmental conditions. Rocol earned the original success by producing technically advanced industrial lubricants. However, with broadening of the industrial market, profits of the company fell down. As a result, the management of the company took the decision to diversify the production operations by broadening the frames of the industrial market, including the production of not only industrial lubricants, but also technical compounds, dusters and cleaners (Sekhar, 2010). Thus, the new products belong to the same industry category with the respect to the production, marketing and present customers what can be identified as related diversification. So, within two years of the diversification Rocol Company managed to achieve a wider and more stable market, and maximize annual profits. Moreover, Rocol manufacturer expanded not only the product line,
In fact the CEO’s to diversify into different industries and different product lines by “emerging markets” (Hill, 2014, p 405). This unnecessary shifting has caused a significant loss of market share heartwarming twelve-monthly earnings restrictions.
Olsen, E. (n.d.). Strategic planning: Diversification. Strategic planning kit for dummies, 2nd edition. Retrieved from http://www.dummies.com/how-to/content/strategic-planning-diversification.html
There are several external growth methods that entrepreneurs may choose for growing their business which are ‘a merger with’ or ‘acquisition of’ other companies.
In my eyes, there are many reasons I think diversity is important. I have outlined the most important to me. We live in a world and system dominated by white individuals. I find it necessary to be the best at financial advising in a field that is not shaped for me. I have made it my personal mission to be a dominant force and a highly respected individual in the financial industry. The main reason we need diversity in the financial industries profession is because minorities need a voice. Another great reason is to subdue a system that oppresses minorities and most likely will sway large minority investors from dealing with a company dominated by whites. the final reason i feel it is very important is because the field has only had one point of view. I will not say that every white person has had the same upbringing, never had hardship or that a minority has not lived a better life than a white person, but I will say that the minority experience is still truly different. Specifically in reference to myself, I will bring a specific flavor a white counterpart , simply cannot recreate. In saying these things, i do not want to be seen as prejudice, but I want everyone to see the true benefits of minorities in the workplace and the way people around me think and behave.
Firstly, to understand what Pisces’ corporate-level strategy is, understanding the term of is vital. Corporate-level strategy is strategies undertaken by firms to gain competitive advantage through diversification of single business operation to multiple operations competing in different product market (Ireland 154). From the concept, we will realise that Pisces had also adopted the use of International Strategy. International Strategy is strategies taken by a company by selling goods or services outside its home market. In the case of Pisces, they expanded by diversifying their operation out of its home (Singapore) market to Saudi Arabia, China, Thailand and more. We will discuss about the multi-domestic strategy that I feel that was the strategy adopted by Pisces. Multi-domestic strategies are strategies in which operation decision are made by the strategic business unit of each country to allow customization of decision towards the local market. For these areas, I will be making use of the Value-Creating Diversification Strategies (Ireland 159) and the International Corporate Level Strategies diagram to help me to assess the types of strategies deployed by Pisces.
Business Model Innovation as a research field and practice, offers a way to think about renewing competitive advantage and bolter growth in an increasingly challenging environment. Developing a successful business model is insufficient to assure competitive advantage as imitation is often easy: a differentiated (and hard to imitate) - yet effective and efficient business model is more likely to yield profits. Business model innovation can itself be a pathway to competitive advantage if the model is sufficiently differentiated and hard to replicate for incumbents and new entrants alike (Teece 2010). Moreover, studies on the topic have shown that firms that were financial outperformers put twice as much emphasis on business model innovation as underperformers (Giesen et al. 2007) and a better business model often will beat a better idea or technology (Chesbrough 2007).
According to Kinicki, diversity represents the multitude of individual’s differences and similarities that exist among people. When developing a cultural diversity training program, one has to manage diversity with a new approach of inclusion and recognition. Managing diversity enables people to perform up to their maximum potential (Kinicki p. 111). As we analyze diversity, we will evaluate some common barriers and challenges in managing diversity. In developing a diversity program, we will analyze methods and procedures that will be apart of the program. Kinicki (p.*) says an important first step in overcoming these obstacles is for leaders to convey to their employees why the organization values diversity.
Firms exist with the purpose of create and deliver economic value (Bensaco et al 2010, p. 365); therefore, business that create better economic value than its competitors will attain an advantage position in market place. Companies might try to improve its sales (profit) through domestic expansion, product diversification or by internationalisation; this report will focus on the reasons of espressamente Illy to expand internationally; additionally, its sources of competitive advantage and, the analysis of three markets in which company want to participate.
There are three premises of corporate strategy, which any successful corporate strategy is built on a number of premises. The first premise is competition occurs on the business unit level, which diversified companies do not compete, only their business units do. The second premise is diversification inevitably adds costs