#Diversification strategy example driver

by addressing safety and/or environmental issues and more.Дoes your capital investment plan leverage diversification? Assess the Opportunity for a Good Return:.in diversifying by adding new products and services and/or new markets.in serving existing customers better and more profitably.in improving productivity and/or workflow.Efficient Diversification:Д®nsure that you review the costs and benefits of investment

#Diversification strategy example driver

The driver for this acquisition decision is profit it needs to be a low risk investment, with high potential for return. Or the acquisition might provide an offsetting cash flow during a seasonal lull. Why would a company want to engage in unrelated diversification? Because there may be cost efficiencies. This is unrelated diversification: there is no direct fit with the existing business. For example, the same phone company might decide to go into the television business or into the radio business. It is when a business adds new, or unrelated, product lines or markets. And on the other side, the diversification analysis might over-estimate the benefits to be gained in synergies. layoffs and terminations, promotions, and even recruitment. Why? It is usually because the diversification analysis under-estimates the cost of some of the softer issues: change management, integrating two cultures, handling employees. With a related diversification strategy you have the advantage of understanding the business and of knowing what the industry opportunities and threats are yet a number of related acquisitions fail to provide the benefits or returns originally predicted. For example, a phone company that adds or expands its wireless products and services by purchasing another wireless company is engaging in related diversification. It is when a business adds or expands its existing product lines or markets. Дiversification can be segmented into related diversification or unrelated diversification. Which Strategy Best-Fits Your Business? Why diversify?ДЄ diversification analysis needs to demonstrate, and support, that the business will achieve a return on the investment that more than compensates for the risk and the cost.ДЄ business owner needs to consider efficient diversification strategies to build a competitive advantage, to achieve economies of scale or scope, and/or to take advantage of a financial opportunity that aligns with the businessвЂ™ strategic plan.