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Unrelated diversification occurs when companies enter a market not similar to their own. In other words, that market does not have any commonalities with the company’s industry. With this strategy, companies develop strategic business units.
Jan 24, 2023 · Unrelated diversification refers to diversification into products, services or markets that are unrelated to the company’s original core competencies. There are three main types of diversification: (1) related, (2) unrelated, and (3) geographic (Kennedy et al., 2020).
Unrelated diversification is a corporate strategy in which a company expands its operations into areas that are not linked to its current businesses or industries. This approach is also known as conglomerate diversification.
There are three types of diversification: Related Diversification —Diversifying into business lines in the same industry; Volkswagen acquiring Audi is an example. Unrelated Diversification —Diversifying into new industries, such as Amazon entering the grocery store business with its purchase of Whole Foods.
Distinguish related and unrelated diversification. Firms using diversification strategies enter entirely new industries. While vertical integration involves a firm moving into a new part of a value chain that it is already is within, diversification requires moving into new value chains.
What is Unrelated Diversification? Unrelated diversification involves all the benefits and processes involved in diversifying. It also includes expanding operations into new products and markets. However, it does not focus on exploiting similarities or commonalities.
Distinguish related and unrelated diversification. Firms using diversification strategies enter entirely new industries. While vertical integration involves a firm moving into a new part of a value chain that it is already is within, diversification requires moving into new value chains.
Unrelated diversification has a positive (p = 0.001) effect on firm performance in the bottom quartile of capital development, while the effect of unrelated diversification on performance is not significant in the top quartile of capital market development.
Unrelated diversification occurs when a company’s businesses do not share strategic assets or resources and do not have interrelationships of strategic importance. Companies can pursue both types of diversification simultaneously, and thus have a portfolio of businesses both related and unrelated.
Aug 20, 2022 · In response, the aims of this article are to offer a critical review of recent work on regional diversification and to incorporate a broader understanding of unrelated diversification and its implications for economic and technological disparities among regions.
