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21download_doc-2.php - Chapter 7 Outline Day 9 Product...

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Chapter 7 Outline Day 9 Product Diversification I. Corporate Level Strategy a. Corporate Level Strategy should create value: i. Such that businesses forming the corporate whole are worth more than they would be under independent ownership. ii. That equity holders cannot create through portfolio investing b. Therefore i. Corporate level strategy must create synergies between divisions that create value that couldn’t be created by independent ownership ii. Economies of scope differentiation II. Diversification a. The difference between integration and diversification: i. Integration-value chain of current products/ business ii. Diversification-different products/ businesses b. Five Types of Corporate Diversification i. Limited Diversification 1. Single business: > 95% of revenues in single business 2. Dominant business: 70% to 95% in single business ii. Related Diversification (less than 70% of revenues in single business) 1. Related Constrained: all businesses related on most dimensions (customers, technology, distribution, brand) 2. Related Link: some businesses related on some dimensions iii. Unrelated Diversification (less than 70% of revenues in single business) 1.
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