Corporate Strategy Diversification - Prof. Dr. Bernd Venohr

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Levels and types of diversification: the“related ratio” Low Levels of Diversification Single business Moderate to High Levels of Diversification Related linked (mixed) < 70% of revenues from dominant business, only limited links exist Very High Levels of Diversification > 95% of revenues from single business unit Dominant business Between 70% and 95% of revenues from single business unit Related constrained Unrelated- < 70% of revenues from dominant business; all businesses share activities in value chain Business units not closely related Source: Robert M. Grant, Contemporary Strategy Analysis: Concepts, Techniques, Applications (5th edition, Blackwell, 2004) Diversified © 2006 Dr. Bernd Venohr A B A A B C A B C A B C 10
Two alternative diversification strategies: related versus unrelated � Related diversification strategies: firm moves from a core of activities in a specific product market to other related activities and markets – Demand and/or cost linkages between lines of business – Sharing value chain activities and transferring core competencies � Unrelated diversification strategies – Replace external capital market with internal capital market allocation – No linkages between businesses Source: Corey Phelps; Mgmt 430 © 2006 Dr. Bernd Venohr 11
Page 1 and 2: © 2006 Dr. Bernd Venohr Corporate
Page 3 and 4: Where are we today? External Enviro
Page 5 and 6: Key issues corporate versus busines
Page 7 and 8: Goal of Corporate Strategy: create
Page 9: Corporate strategy: diversification
Page 13 and 14: Vertical Diversification: Number of
Page 15 and 16: Degree of vertical diversification
Page 17 and 18: Vertical diversification: Some Vert
Page 19 and 20: Vertical diversification: Different
Page 21 and 22: Horizontal diversification: Identif
Page 23 and 24: Horizontal diversification: Transfe
Page 25 and 26: Unrelated Diversification: diversif
Page 27 and 28: Example of unrelated diversificatio
Page 29 and 30: Theory of unrelated diversification
Page 31 and 32: Underrated „good reason“ for un
Page 33 and 34: New Assignment and Outlook next Ses
Page 35 and 36: Remarks-Premises of Corporate Strat
Page 37 and 38: Vertical diversification: The Costs
Page 39 and 40: Remarks-Theory of unrelated diversi
Page 41 and 42: Empirical results diversification a
Page 43 and 44: Core Competencies: What a firm does
Page 45 and 46: Capabilities: What a firm does �
Page 47: Canon: Products and Core Technical

Corporate Strategy Diversification - Prof. Dr. Bernd Venohr

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