Advantages of an Unrelated Diversification Strategy

Question

What are the advantages of an Unrelated Diversification Strategy?

Answer 1

The advantages of an Unrelated Diversification Strategy

Unrelated diversification can be attractive in several other conditions such as when a firm requires to diversify away from an unattractive or endangered industry and has no different competencies or capabilities it can move to an nearby industry. There is also a rationale for unrelated diversification to the extent that owners have a powerful preference for spreading business risks extensively and not limiting themselves to investing in a family of closely linked businesses.

Building Shareholder Value via Unrelated Diversification:

This is predicated on managerial skill in managing a set of unrelated businesses.