Opportunities to expand product offerings or expand into new geographical areas disadvantages of related diversification complexity and difficulty of coordinating different but related businesses introduction (cont) conglomerate or unrelated diversification firms pursue this strategy for several reasons: continue to grow. The walt disney company was broadly diversified into theme parks, hotels and resorts, cruise ships, cable networks, broadcast television networks, television related diversification through vertical integration a) animation studios b) television (disney channel) c) consumer products d) unrelated diversification. Corporate strategy is often a question of diversification how can firms leverage their current position across markets to build profits in this module, we'll discuss firm scope and the financial, operational, and strategic reasons to expand and diversify we'll explore the theory of the firm--or why firms exist and how this relates. There are three types of diversification: • concentric or related diversification • conglomerate or unrelated diversification • horizontal diversification 5 6 concentric or related diversification • when an organization takes up related activities within a wider industry situation, it is termed as.
The portfolio approach to corporate strategy is often associated with the conglomerate organizational model this is described by rumelt as companies that diversified into multiple, unrelated businesses through the acquisition of large numbers of business units in this model the business units are largely independent, and. Chapter 9 diversification strategies for managing a group of businesses9-1 chapter roadmap when to diversify strategies for entering new businesses choosing the diversification path: related versus unrelated the walt disney company is in the following businesses: — theme parks. One of the key lessons from decades of academic research on mergers and acquisitions (apart from the little-known fact that deals tend to fail at least as often as they succeed) is that related diversification tends to outperform unrelated diversification in other words, corporations with multiple business units.
Tion or focused business strategies seem to provide the firms with a larger portion of revenues, and ebit1, more than for a related business diversification how- ever, an unrelated business strategy or focused strategy seem to decrease vari- ables measuring management effectiveness or profitability (ros,. Each module recommends four to six items whenever possible at least one alternative item for each main recommendation is included, as well as suggested supplemental readings that may provide a broader conceptual context cases form the core of many modules but we also include readings from harvard business.
Unit 2 topics: diversification strategy related and unrelated diversification case/workshop: walt disney co: the entertainment king (hbsp 701035-pdf- eng) unit 3 topics: vertical integration case/workshop: the walt disney company and pixar, inc: to acquire or not to acquire (hbsp 709462-pdf- eng. Shareholders can choose to buy either a diversified portfolio of shares, or a share with a diversified portfolio companies in unrelated industries while maintaining steady growth related items idea: differentiationoct 6th 2009 enthusiasm for diversification increased in the 1960s and early 1970s. -new territories- internationalization -new segments of purchasers -new distribution channels -new possibilities for utilization new product development: -new products (r&d, innovation) -new product lines -new services diversification: -concentric (or related) -by conglomerates (or unrelated.
Mance decreased as firms shifted from concentrated business strategies to related diversification, but performance increased as firms changed from related diversifica- tion to unrelated diversification on the other hand, financial efficiency variables measuring management effectiveness or profitability (ros, roa and roe). 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 for example. Which strategy best-fits your business understand the differences between related diversification and unrelated diversification before you invest to diversify in your business, your markets, or your products can be costly therefore, invest in an efficient diversification strategy.
The benefits of product diversification have been divided into two categories depending on the type of diversification: related or unrelated related product diversification refers to entries into new products or service businesses that have a connection to the firms existing markets (peng, 2008) researches (hoskisson, 2007). Concentric diversification involves adding similar products or services to the existing business for example, when a computer 3 conglomerate diversification conglomerate diversification involves adding new products or services that are significantly unrelated and with no technological or commercial similarities.
Comparison between the level of diversification for these large public firms and public firms in general easy to calculate, do not differ- entiate between types of diversification (related versus unrelated, marketing- consider, for example, the expansion of the walt disney company (collis 1988) from disney's base in. One can only think that apple has some form of disney-esque spell placed on it by its innovative godfathers, aka the creative ceos that have been at its helm both past and present after all, recent research found that “apple's strategy displays related diversification those who argue that its success is. The case of hmv makes me think of diversification as a marketing strategy diversification can occur either at the business unit level or at the corporate level at the take a page from disney here and ensure that what on the surface may seem very different - cruise ships and children's cartoons - are in. A merger between firms that are involved in totally unrelated business activities there are two types of conglomerate mergers: pure and mixed pure conglomerate mergers involve firms with nothing in common, while mixed conglomerate mergers involve firms that are looking for product extensions or.