Strategies to widen a diversified business base of company

Question

What are the strategies to widen a diversified business base of company?

Answer 1

Strategies to widen a diversified company’s business base:

1. Diversified companies sometimes find it attractive to make positions in new industries, whether unrelated or related.

2. There are several motivating factors:

i. Slow growth that makes the potential revenue and profit increase of a newly acquired business appear attractive.

ii. Vulnerability to recessionary or seasonal influences or to threats from budding new technologies.

iii. The potential for transferring capabilities and resources to other complementary or linked businesses.

iv. Quickly changing circumstances in one or more of a company’s center businesses brought on by legislative, technological, or new product innovations that change purchaser requirements and preferences.

v. To complement and reinforce the competitive capabilities and market-place of one or more of its current businesses.

3. Frequently, growth into new businesses is undertaken by acquiring companies already in the aim industry.