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Diversification - Diversification STRATEGY AND COMPETITIVE...

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1 STRATEGY AND STRATEGY AND COMPETITIVE ADVANTAGE COMPETITIVE ADVANTAGE IN DIVERSIFIED IN DIVERSIFIED COMPANIES COMPANIES Diversification
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2 Diversification and Corporate Strategy A company is diversified when it is in two or more lines of business Strategy-making in a diversified company is a bigger picture exercise than crafting a strategy for a single line-of-business A diversified company needs a multi- industry, multi-business strategy A strategic action plan must be developed for several different businesses competing in diverse industry environments
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3 When Does Diversification Start to Make Sense? Strong competitive position, rapid market growth -- Not a good time to diversify Strong competitive position, slow market growth -- Diversification is top priority consideration Weak competitive position, rapid market growth -- Not a good time to diversify Weak competitive position, slow market growth -- Diversification merits consideration
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4 Stages in Transitioning from a Single Business to a Diversified Company STAGE 1 STAGE 1 : Small single-business serving a regional market STAGE 2 STAGE 2 : Geographic expansion STAGE 3 STAGE 3 : Vertical integration (optional) STAGE 4 STAGE 4 : Diversification --usually initiated when growth opportunities dwindle in the company’s present business What next?
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