Corporate Strategy: Diversification and The Multibusiness Company

 Assalamualaikum.... say Alhamdulillah.....today we still given a chance to breathe again...keep smiling... :) 

 

Ok for this time i want share a little bit about what i understand in lecture.WHAT CORPORATE STRATEGY?? In corporate strategy there are measure/crafting a diversification strategy entail which is

1-  picking new industries to enter and deciding on the means of entry

                             2- pusuing opportunities to leverage cross-business value chain relationships and strategic fit into competitive.

                         3- establishing investment priorities and steering corporate resources into the most attractive business units

4- initiating actions to boost the combined performance of the cooperation's collection of business

There are 4 component that a company becomes a prime candidate for DIVERSIFYING

1)  When it spots opportunities for expanding into industries whose technologies and products complement its present business.  2) When it can leverage its collection of resources and capabilities by expanding into business where these resources and capabilities are valuable competitive assets. 3) When diversifying into additional business opens new avenues for reducing costs.4) When it has a powerful and well-known brand name that can be transferred to the products of other business. Futhermore, to diversify a new business must past 3 tests. Firstly the industry attractiveness test which is must offer an opportunity for profits and return on investment. Secondly, the cost of entry test which is must not be so high as to exceed the potential for good profitability. Thirdly, the better off test which is synergy ( create added value via diversification requires building a multibusiness company)    Moreover, once a company decides to divesify, it faces the choice to diversify into related businesses, unrelated businesses or some mix of both.Related business means have competitively valuable cross-business value chain and resource matchups. While unrelated businesses means have dissimilar value chains and resource requirements with no competitively important cross-business relationships at the value chain level.