Corporate Strategy: Diversification and the Multibusiness Company

Hi! We see again. ^^ Alright, now I would like to share a little bit about corporate strategy. What is corporate strategy? Corporate strategy is an organization that includes more than one industry such Tabung Haji. Tabung Haji expands their business from one industry to another industry like TH investment, TH hotels, TH plantations, and so on. Basically, there are two types of diversification which are related and unrelated diversification. Furthermore, there are four steps to crafting a diversification strategy entail. You can search the details steps on the website by yourself. Hihi

Now, we move on to the test diversification adds value for shareholders which are the attractiveness which is to look the profit whether it is good or not, cost of entry test, and better-off test.  Next, the advantages of diversification by acquisition of an existing business are accelerate time, barrier to entry is reduce because of the companies already acquire the rivals and very quick way. However, the disadvantages are the companies will be influence by another companies like bill out companies. Apart from that, company should pay more to acquire company with best performance and also can under estimating cost.

Next, I would like to talk a little bit about related business, unrelated business, and both related and unrelated business. Related business refers to a firm or organization that has competitively valuable cross-business value chain and resources match ups such as L’Oreal. They offer perfumes, cosmetics, personal care and etc. Meanwhile, unrelated business is a company that have dissimilar value chains and resources requirements, with no competitively important cross-business relationships at the value chain level such as Tabung Haji. They have TH plantations, TH marine, TH investments; and so on that exactly not similar with the core business which is facilitates savings for the pilgrimage to Mecca. Other than that, example of both related and unrelated business is Walt Disney. This company share resources in term of icon. They use icon from another company such as Spider man.

Lastly, we move on the potential cross-business fit. Firstly, supply chain activities such as Dell computer which produce LCD TVs.  Secondly, R & D and technology activities like Unifi. They combine TV and their cable. Thirdly, the potential cross-business fits is sales and marketing activities which refers to a company that produce many products. Fourthly is manufacturing-related business such as Bombardier Inc. This company use same thing to produce variety of products. Apart from that, this company is snow maker and motorcycles manufacturer.  

Thank you. ^^