Strategic Management: Formulation and Implementation

Unrelated Diversification And Shareholders Value

Related diversification represents a strategic approach to value creation because it is predicated on exploiting the links between the activity-cost chains of different businesses to lower costs, transfer skills and technological expertise, and gain benefit of other kinds of strategic fit.

In contrast, unrelated diversification represents a financial approach to diversification where shareholder value accrues from astute deployment of corporate financial resources and from executive skill in spotting financially attractive business opportunities.

For unrelated diversification to result in enhanced shareholders value, corporate strategists must exhibit superior skills in creating and managing a portfolio of diversified business interests.

Implementation Of Growth Strategy

A company can grow in three fundamental ways, and all companies must choose among these options.

These growth options should match the right strategic and operational "fit" to the right structure.

There are three modes of organization: internal, extended, and external.