SGMT 3000 Chapter 10: Chapter 10 – Corporate-Level Strategy - Related & Unrelated Diversification

• School: York University
• Department: Strategic Management
• Course: SGMT 3000
• Professor: T B A

Document Summary

Better off test: firm must be more valuable than it was before the diversification; that value must not be fully capitalized by the cost of the diversification move. Diversified company: makes and sells products in two or more different or distinct industries that are not adjacent pieces in the same value chain. Chapter 10 corporate-level strategy: related & unrelated diversification. Diversification: company"s decision whether to enter one or more new industries to take advantage of existing distinctive competencies and business model. Leveraging competencies to create a new business. Real strategic value: competencies transferred must involve value-chain activities that become an important source of a specific business unit"s competitive advantage in the future; not every commonality is enough to create value and benefits. Economies of scope: synergies that arise when one or more of a diversified company"s business units are able to lower costs or increase differentiation because they can more effectively pool, share, utilize expensive resources or capabilities.