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Essay / Research Paper Abstract
This 3 page paper looks at when diversification may be beneficial to a firm, and when it is a strategy that is inadvisable. The paper defines diversification and then looks at the types of diversification and the potential benefits and considers times when the coasts may outweigh the benefits. The bibliography cites 3 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEdiversif.rtf
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Unformatted sample text from the term paper:
services or goods it already operates, for example a car manufacturer may start to produce some of the components it needs, a form of vertical integration, or a canning company
that processes salmon may start to process carrots or other foods, here there is the use of the existing core competencies. There is also the potential for a firm
to undertake unrelated diversification; this is where the new area of operations is not linked to the core operations of the firm, for example, if the canning company or the
car manufacturer chose to purchase a media firm. There are many advantages that can be realised when a firm follows a strategy of diversification, but it is not always
an advantageous. For a firm to undertake diversification the literature will usually recommend a course of related diversification, moving into markets or areas of production where the firm already has
a degree of knowledge. Examples where a firm may be able to benefit from diversification include scenarios where a firm is reliant
on trading partners, up or down stream, there is the potential for the diversification to reduce the reliance on outside parties and add value to the supply chain, from which
the firm may benefit (Thompson, 2007). If there are under utilised resources there may also be a benefit from related diversification if these under used resources are leveraged, these may
include assets such as production facilitates, but may equally include human capital and knowledge or even financial resources. Where the firm already has an interest in a market the learning
curve, and as such the lead period or time to profit may be less due to the less steep learning curve. Opportunities where existing, skills, knowledge and even market may
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