Please explain (in 50-100 words), each type of diversification associated with U
ID: 356236 • Letter: P
Question
Please explain (in 50-100 words), each type of diversification associated with Unrelated Diversification and provide an example. In addition, Please discuss (in 50-100 words) when would a company benefit from Unrelated Diversification
FIGURE 8.2 Related Diversification Is Built upon Competitively Valuable Strategic Fit in Value Chain Activities Representative Value Chain Activities Support Activities Business Supply Chain Activities Technology) Operations Sales and Marketing Distribution Customer Service Competitively valuable opportunities for technology or skills transfer, cost reduction, common brand name usage, and cross-business collaboration exist at one or more points along the value chains of Business A and Business B. Business Bunlar Supply Chain Activities tretiratemy operations) | Technology) Operations Sales and Marketing, Distribution . Customer Service Support ActivitiesExplanation / Answer
Unrelated diversification refers to a form of diversification when a business enters a completly new market with a new or unrelated product to the existing company.For example, if an cloth manufacturing company enters a food manufacturing company. In this case there is no direct connection of new business to already existing business. This is unrealted diversification.
This type of diversification is suitable under favourable financial conditions and potential for high revenue. A good example would be the entry of BPO's in the Banking Industry.The banks were only concerened with core banking but now they have entered the outsourcing industry, where they are doing a good job and it is working well n profitable for them.
A company would benefit from Unrelated Diversification
A good example for Unrelated Diversification would be that of General Electric. Initially they were a business providing infrastructure and finacial services globally. But now, they have diversified into n number of businesses in new markets like aviation, healthcare, appliances and lighting,energy management, transportation and many others.