Discussion Post: The Value of Diversification
Diversification presents businesses with the opportunity to enter new markets, expand product or service lines, and, if done effectively, broaden the scope or reach of a business. The process of diversification requires the development of effective strategies to be implemented at the business unit level and/or at the corporate level. For this Discussion, you will utilize a specific case to compare these two strategy options. Within this, you will examine the role, challenges, and potential benefits of diversification strategies within an organization.
To prepare for this Discussion, review the "Cisco Systems: Growth Through Diversification and Acquisition" case found on pages 108-109 of Dyer, Godfrey, Jensen, and Bryce (2016) and consider how companies can utilize diversification strategies to create organizational value and competitive advantage. You may also want to review the video titled "The Upside of Concentrating Risk," as well as the cases provided in this week's Optional Resources for further research on diversification initiatives and business strategy effectiveness.
Task
Post a comparison of corporate strategy versus business-unit-level strategy. In your comparison, address the following:
1) How does corporate strategy differentiate from a business-unit-level strategy, including advantages and disadvantages of each?
2) Which approach for diversification (related-constrained or related-linked) has the strongest return on investment in this case study? Explain, including at least one supportive example.
3) In your opinion as an independent scholar, why does diversification most often fail to add value? Explain with at least one supportive example.
4) What factors should executives consider when making a decision to diversify through green field entry over making an acquisition? Explain.
The response must include a reference list. One-inch margins, double-space, Using Times New Roman 12 pnt font and APA style of writing and citations.
Reference
1) Dyer, J. H., Godfrey, P., Jensen, R., & Bryce, D. (2016). Strategic management: Concepts and tools for creating real world strategy. Hoboken, NJ: John Wiley & Sons.
2) Review Chapter 13: "Corporate Governance and Ethics" (pp. 256-273)
3) Case 13: "Corporate Governance and Ethics: A Series of Decisions" (pp. C-119-C-120)
4) Driver, M. (2012). An interview with Michael Porter: Social entrepreneurship and the transformation of capitalism. Academy of Management Learning & Education, 11(3), 421-431. doi:10.5465/amle.2011.0002B.