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Notes for Diversification 11-17-2009 (Autosaved)

Notes for Diversification 11-17-2009 (Autosaved) -...

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11-17-2009 Diversification 1) Diversification – Spreading Risk, Expanding your business into a new realm of a related area of business or an unrelated area. a) Relatedness based on 2 things i) Are they similar in a technological sense ii) Are they similar in terms of market (1) Tobacco companies go into food investments because they are consumer goods and the market is the same 2) 3 Growth Strategies a) Do it Yourself i) Horizontal ii) Vertical iii) Geographical Expansion (integration) b) Buy It (Acquisition) c) Partner (Short or long term 3) Distinctive versus Core Competencies a) From a resource based view of the firm it is relatively clear that you do not want to go into a new business arena where you do not have some established capabilities and experience. b) Don’t use Core Competency to explain, use Distincitve Competency c) For something to be a Core Competency it has to satisfy these 3 things i) Expandability ii) Transferability iii) Inimitability (1)
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