Corporate Diversification Strategies

Abstract

Attention shifts from formulating strategy for a single-business enterprise to formulating strategy for a diversified enterprise. Because a diversified firm is a collection of individual businesses but corporate strategy - making is a bigger picture exercise than crafting strategy for a single-business company. A single-business enterprise, management only has to contend with one industrial environment and how to compete successfully in it. But in diversified company, corporate managers have to craft a multi-business, multi-industry strategic action plan for a number of different business divisions competing in diverse industry environments. A corporate strategy in a diversified company concentrates on: - • Making moves to position the company in the industries chosen for diversification; taking actions to improve the long-term performance of the corporations portfolio of businesses once diversification has been achieved; • Trying to capture whatever strategic benefits that exist within the portfolio of businesses and turn them into competitive advantage; and • Evaluate the profit prospects of each business unit and steer corporate resources into the most attractive strategic opportunities.