Questions and Answers
What is the primary purpose of concentric diversification?
What type of diversification involves moving into unrelated businesses?
In what way is a new product connected to the existing business in concentric diversification?
What is an example of concentric diversification?
Signup and view all the answers
What is vertically integrated diversification?
Signup and view all the answers
What are the two directions of concentric diversification?
Signup and view all the answers
What is the primary benefit of concentric diversification?
Signup and view all the answers
What is the main difference between concentric and conglomerate diversification?
Signup and view all the answers
What is the process of removing employees from a job due to reorganization?
Signup and view all the answers
What type of diversification involves entering a specific product or process to be used in existing products?
Signup and view all the answers
Which of the following is NOT a part of corporate strategy?
Signup and view all the answers
When is vertical integration likely to be beneficial?
Signup and view all the answers
At which level is a stability strategy typically employed?
Signup and view all the answers
What is another name for conglomerate diversification?
Signup and view all the answers
What is the primary benefit of diversification?
Signup and view all the answers
What is the primary purpose of strategic options in a firm's portfolio?
Signup and view all the answers
What is the process of removing employees from a job in one business to relocate them in another business?
Signup and view all the answers
What is the main advantage of adopting a portfolio approach in a multi-product, multi-business firm?
Signup and view all the answers
What is the objective of analyzing the current business portfolio?
Signup and view all the answers
What is the purpose of Ansoff's Product Market Growth Matrix?
Signup and view all the answers
What should companies always be looking to?
Signup and view all the answers
What is the result of using Ansoff's Product Market Growth Matrix?
Signup and view all the answers
Why do diversified companies divert resources from cash-rich businesses?
Signup and view all the answers
What may result from analyzing the current business portfolio?
Signup and view all the answers
What is the main purpose of Ansoff's product market growth matrix?
Signup and view all the answers
What is market penetration, according to Ansoff's product market growth matrix?
Signup and view all the answers
What is product development, according to Ansoff's product market growth matrix?
Signup and view all the answers
What is market development, according to Ansoff's product market growth matrix?
Signup and view all the answers
Why is the development of new products a significant challenge for Aurobindo, a pharmaceutical company?
Signup and view all the answers
Why might Aurobindo's product development strategy be influenced by social dimensions?
Signup and view all the answers
What is the primary intention of vertically integrated diversification?
Signup and view all the answers
What is Ansoff's product market growth matrix divided into?
Signup and view all the answers
What is the risk associated with conglomerate diversification?
Signup and view all the answers
What strategy can Aurobindo adopt simultaneously for its different products?
Signup and view all the answers
What is the primary goal of a turnaround strategy?
Signup and view all the answers
What is the first step in a turnaround strategy?
Signup and view all the answers
What may be changed during the turnaround process?
Signup and view all the answers
What is necessary for the success of a turnaround strategy?
Signup and view all the answers
What is the second stage of a turnaround strategy?
Signup and view all the answers
Why is a turnaround strategy necessary for XYZ Company?
Signup and view all the answers
Study Notes
Diversification Strategies
- Diversification can be classified into two broad categories: concentric diversification and conglomerate diversification.
- Concentric diversification involves diversification into related businesses to benefit from synergistic gains.
- Conglomerate diversification involves diversification into unrelated businesses to explore more opportunities beyond existing areas of expertise.
Concentric Diversification
- Concentric diversification occurs when the new business is linked to the existing business through process, technology, or marketing.
- The new product is a spin-off from the existing facilities and products/processes, benefiting from synergies with current operations.
- Examples of concentric diversification include a clothing company venturing into shoe manufacturing.
Vertical Integration
- Vertical integration is a type of concentric diversification where firms engage in businesses related to their existing business.
- It can be beneficial when lower transaction costs and improved coordination are vital and achievable through vertical integration.
Horizontal Integration
- Horizontal integration is a type of concentric diversification where firms expand their business in the same industry or product line.
Ansoff's Product Market Growth Matrix
- Ansoff's product market growth matrix is a tool that helps businesses decide their product and market growth strategy.
- The matrix consists of four quadrants: market penetration, product development, market development, and diversification.
- Market penetration involves selling existing products into existing markets.
- Product development involves introducing new products into existing markets.
- Market development involves selling existing products into new markets.
- Diversification involves selling new products into new markets.
Strategic Options
- Strategic options need to be carved out from existing products and innovations happening in the industry.
- Portfolio approach helps in resource allocation to businesses with the greatest potential.
- Analysis of the current business portfolio helps in deciding which businesses to invest in or divest.
Turnaround Strategy
- Turnaround strategy is used to reverse the decline of an organization and bring improvement to its health.
- It involves assessing current problems, analyzing the situation, and developing a strategic plan with specific goals and detailed functional actions.
- Repositioning may be required, involving changes to the product mix and focus on short and long-term financing needs, as well as strategic issues.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Learn about the different types of diversification strategies used by businesses to expand and grow. Identify the key differences between concentric and conglomerate diversification.