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Related diversification is a strategic approach in which a business expands its operations into areas similar to its existing operations. 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.
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What is the difference between related and Unrelated Diversification?
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What is related diversification?
Which companies use Unrelated Diversification?
Related and unrelated diversification can have many differences. These differences come from how these strategies work and help companies achieve better results. While both fall under diversification, they are opposites.
Generally, related diversification (entering a new industry that has important similarities with a firm’s existing industries) is wiser than unrelated diversification (entering a new industry that lacks such similarities). Geographic diversification is another strategy to drive synergy.
- Adapted by Reed Kennedy, Joseph Simpson, Pankaj Kumar, Ayenda Kemp, Kiran Awate, Kathleen Manning
- 2020
It is when a business adds new, or unrelated, product lines or markets. For example, the same phone company might decide to go into the television business or into the radio business. This is unrelated diversification: there is no direct fit with the existing business.
- It is when a business adds or expands its existing product lines or markets. For example, a phone company that adds or expands its wireless product...
- Ensure that you review the costs and benefits of investment 1. in new equipment; 2. in labor saving costs; 3. in improving productivity and/or work...
- 1. New markets and new products or services are usually good diversification opportunities; but consider these opportunities in the context of inte...
Sep 5, 2023 · Related diversification is a sub-type, referring to diversification into an industry or business that is related to your main business’s core competency. Companies that diversify into related products and services can leverage existing knowledge, skills, and networds to get a competitive advantage.
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).
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.
