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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 strategies involve companies expanding into industries or markets with no significant connection to their existing lines of business. This approach is often pursued to spread risk across diverse industries or optimize excess cash use. Here are some notable examples of companies that have implemented unrelated ...
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.
Aug 18, 2022 · In this brief article, we will explain what diversification is, what is unrelated diversification, and what are some examples of it. Unrelated diversification may sound like a complex business concept, but it is not.
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.
This is a good example of unrelated diversification, which occurs when a firm enters an industry that lacks any important similarities with the firm’s existing industry or industries ( Table 8.5 “Unrelated Diversification at Berkshire Hathaway” ).
Sep 21, 2023 · Here is why: Risk reduction: Diversification helps spread risks across different industries or markets, decreasing dependence on a single source of revenue. Opportunity for growth: Exploring new markets or industries can open doors to untapped customer segments, leading to increased sales and profits.
Most unrelated diversification efforts, however, do not have happy endings. Harley-Davidson, for example, once tried to sell Harley-branded bottled water. Starbucks tried to diversify into offering Starbucks-branded furniture. Both efforts were disasters.
This is a good example of unrelated diversification, which occurs when a firm enters an industry that lacks any important similarities with the firm’s existing industry or industries. Luckily for Coca-Cola, its investment paid off—Columbia was sold to Sony for $3.4 billion just seven years later. Example 7.8 Unrelated Diversification.
Apr 5, 2005 · Strategies of Unrelated Diversification. By: Samhita Jayanti, Bharat N. Anand. Conglomerates lie at the heart of debates in corporate strategy. They include, perhaps, the best known companies in history--Beatrice Corp., General Electric, ITT, Siemens, and ABB--and at various… Length: 9 page (s) Publication Date: Apr 5, 2005. Discipline: Strategy.
