Repharse this whole thing to more simpler and more understandable , main thing i
ID: 433890 • Letter: R
Question
Repharse this whole thing to more simpler and more understandable , main thing is do not less than 500 words after rephrase , i repeat do not less than 500 words must be more than 500 words more than 500
DIVERSIFICATION STRATEGIES:
The reason for crafting diversification strategies on a corporate level are based on three facts:
Picking new industries to enter and deciding the means of entry
Pursuing opportunities to leverage cross-business value chain relationships, where there is a strategic fit, into a competitive advantage
Initiating actions to boost the combined performance of the corporation’s collection of businesses.
The primary reasons for businesses to pursue a diversification strategy is often due to the stagnation in the growth of their business offerings for matured industries. Diversifying into new industries will allow the single-businesses company to navigate away from diminishing market opportunities and stagnating sales of its principal business thus creating a new business as a strategy.
APPROACHES OF DIVERSIFICATION
The means of entering new businesses take on any of the three forms:
1) Acquisition
Diversifying by the acquisition of an existing business:
The acquisition is one of the most popular means of diversifying into another industry. It is quicker method than launching a new operation and also serves as an effective way to surpass entry barriers such as technological know-how, establishing supplier relationships, achieving scale economies, building brand awareness and securing adequate distributions.
2) Internal Start-up
Entering a new line of business through internal development:
Achieving diversification through internal development is the process of starting a new subsidiary from scratch. Although the initial processes to internal development can be time-consuming, the final outcome of this diversification form allows businesses to avoid the issues faced in acquisition processes and offers businesses with a viable solution when there are no good enough acquisition candidates.
3) Joint ventures with other companies.
Using Joint venture to achieve diversification
Entering a new business through a joint venture is useful in 3 types of situations
A joint venture is a good vehicle for pursuing an opportunity that is too complex, uneconomical, or risky for one company to pursue alone.
Joint ventures make sense when opportunities in a new industry require a broader range of competencies and know-how than a company can marshal on its own
Joint ventures are used to diversify into a new industry when the diversification move entails having operations in a foreign country
1) Related diversification
Related diversification
A related diversification strategy involves building the company around businesses where there is a good cross-business strategic fit across corresponding value chain activities.
Reasons for related diversification:
2) Unrelated diversification.
Unrelated diversification
An unrelated diversification strategy is the willingness to diversify into any business in any industry where senior managers see an opportunity to realize consistently good financial results. With a strategy of unrelated diversification, the acquisition is seen to have the most potential if it passes the industry-attractiveness and cost of entry tests and has room for attractive financial performances.
3.Combination Related-unrelated diversification
Combination Related-unrelated diversification
In actual practices, many business makeups of diversified companies vary considerably. Some diversified companies are dominant enterprises which have one core business account and the remainder accounts are made up of multiple related and unrelated business accounts.
Explanation / Answer
Diversification:
Diversification refers to the act of diversifying the business affairs and extending the line of business either in same line or into some new industry. Diversification is used by the business organizations if they intend to expand their business affairs and work as a new business. Lots of skills and knowledge is required in order to diversify the affairs and compete in the competitive world.
Types of Diversification:
There are mainly three types of diversification in which any business can involve itself in. The three main types of diversification are:
Diversification Strategies:
There are multiple diversification strategies that are used by organization when they intend to expand their business. The main aim of organizations to diversify is to enter new industries apart from the regular industry in which they are working at present, to increase the cross culture value chain relationships and meet the competitive advantage in the market. Diversification will result into growth in the overall business affairs, high performance, navigating away from diminishing business opportunities etc.
Approaches of Diversification:
In order to diversify there are number of strategies that are available in hand to the business organizations. All business organizations can easily select from all the available strategies in order to effectively and profitably diversify their affairs: