A strategy of diversifying into unrelated businesses O is the best way for a company to...
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A strategy of diversifying into unrelated businesses O is the best way for a company to lower its overall business risk, achieve consistently good profitability, and earn a sustainable competitive advantage over rival companies. O involves entering any industry and operating any business where company executives see opportunity to realize consistently good financial results--unlike related diversification strategies, there's no deliberate effort to diversify only into businesses with strategic fit. O is aimed chiefly at broadening a company's present product line and offering customers a bigger choice of models, styles, and product versions. O generally offers more competitive advantage potential than related diversification because of the ease of capturing valuable cross-business resource fits. concentrates on diversifying into businesses where a company can exploit use of a well- known and competitively potent brand name, earn the highest profit margins, and have the greatest number of attractive revenue growth opportunities. The two biggest drawbacks of pursuing unrelated diversification strategies are O (1) no potential for competitive advantage beyond any benefits of corporate parenting and what each individual business can generate on its own and (2) demanding managerial requirements. O (1) demanding managerial requirements and (2) falling into the trap of diversifying into too many cash cow businesses. O (1) increased likelihood that the company's financial resources will be spread thinly over too many distinctly different lines of business and (2) the high risks of conflicts and/or incompatibility among the strategies of the businesses it has diversified into. O (1) weak ability to capture cross-business resource fits and (2) conflicts/incompatibility among the competitive strategies of the company's different businesses. O (1) the likelihood of overspending on efforts to capture economies of scope and (2) difficulty in passing the industry attractiveness test when making new acquisitions. A strategy of diversifying into unrelated businesses O is the best way for a company to lower its overall business risk, achieve consistently good profitability, and earn a sustainable competitive advantage over rival companies. O involves entering any industry and operating any business where company executives see opportunity to realize consistently good financial results--unlike related diversification strategies, there's no deliberate effort to diversify only into businesses with strategic fit. O is aimed chiefly at broadening a company's present product line and offering customers a bigger choice of models, styles, and product versions. O generally offers more competitive advantage potential than related diversification because of the ease of capturing valuable cross-business resource fits. concentrates on diversifying into businesses where a company can exploit use of a well- known and competitively potent brand name, earn the highest profit margins, and have the greatest number of attractive revenue growth opportunities. The two biggest drawbacks of pursuing unrelated diversification strategies are O (1) no potential for competitive advantage beyond any benefits of corporate parenting and what each individual business can generate on its own and (2) demanding managerial requirements. O (1) demanding managerial requirements and (2) falling into the trap of diversifying into too many cash cow businesses. O (1) increased likelihood that the company's financial resources will be spread thinly over too many distinctly different lines of business and (2) the high risks of conflicts and/or incompatibility among the strategies of the businesses it has diversified into. O (1) weak ability to capture cross-business resource fits and (2) conflicts/incompatibility among the competitive strategies of the company's different businesses. O (1) the likelihood of overspending on efforts to capture economies of scope and (2) difficulty in passing the industry attractiveness test when making new acquisitions.
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