In order for corporate diversification to be economically viable there must either be some valuable economy of scope among the multiple businesses in which a firm is operating or it must be less costly for managers in a firm to realize these economies of scope than for an outside equity holder on his or her own.

What are the main types of corporate diversification?

There are three types of diversification: concentric, horizontal, and conglomerate.

• Concentric diversification.
• Horizontal diversification.
• Conglomerate diversification (or lateral diversification)

When a firm simultaneously implements both a product diversification strategy and a geographic market diversification strategy it is said to be implementing?

When a firm operates in multiple geographic markets simultaneously it is said to be implementing a product diversification strategy. A firm has implemented a strategy of limited corporate diversification when all or most of its business activities fall within a single industry and geographic market.

Are substitutes for exploiting economies of scope in diversification?

One substitute for diversification that exists is that instead of obtaining cost or revenue advantages from exploiting economies of scope across businesses in a diversified firm, a firm may decide to simple grow and develop each of its businesses separately.

Are complex sets of resources and capabilities that link different businesses in a diversified firm through managerial and technical know how experience and wisdom?

Core competencies are complex sets of resources and capabilities that link different businesses in a diversified firm through managerial and technical know-how, experience, and wisdom. ... A firm's dominant logic is a common way of thinking about strategy across different businesses.

Export Diversification | IB Development Economics | The Global Economy

41 related questions found

Which of the following can be a substitute for exploiting economies of scope in diversification?

Substitutes for exploiting economies of scope in diversification include: Growing and developing independent business within a diversified firm and strategic alliances. Which of the following statements regarding the rarity of diversification is accurate?

Which of the following describes a firm's theory of how do you gain competitive advantage in an industry by managing several businesses simultaneously?

2) Business strategy is a firm's theory of how to gain competitive advantage by operating in several businesses simultaneously.

Which of the following economies of scope is less costly to duplicate group of answer choices?

38) Internal capital allocation is an example of a less costly-to-duplicate economies of scope. 39) Shared activities, risk reduction, tax advantages, and employee compensation as bases for corporate diversification are usually relatively easy to duplicate.

What are the benefits of diversification?

The benefits of diversification include:

• Minimizes the risk of loss to your overall portfolio.
• Exposes you to more opportunities for return.
• Safeguards you against adverse market cycles.
• Reduces volatility.

How diversification does increase the revenue of the company?

A successful diversification can help you:

1. increase sales and revenue.
2. grow market share.
3. find new revenue streams.
4. achieve higher margins compared to existing products.
5. limit the impact of changes in the market.

How do firms create value when using a related diversification strategy?

How do firms create value when using a related diversification strategy? A company can create value by using what is called a related diversification strategy. This will include operational relatedness and also corporate relatedness. Through operational relatedness the company shares its activities.

What is the importance of economic diversification?

Diversification helps to manage volatility and provide a more stable path for equitable growth and development. Successful diversification is all the more important now in the wake of slowing global growth and the imperative in many developing countries to increase the number and quality of jobs.

What is the meaning of economic diversification?

Economic diversification. Economic diversification is the process of shifting an economy away from a single income source toward multiple sources from a growing range of sectors and markets. Traditionally, it has been applied as a strategy to encourage positive economic growth and development.

Why is diversification important for companies?

Diversification allows for more variety and options for products and services. If done correctly, diversification provides a tremendous boost to brand image and company profitability. Diversification can be used as a defense. By diversifying products or services, a company can protect itself from competing companies.

What is corporate value chain analysis?

Value chain analysis (VCA) is a process where a firm identifies its primary and support activities that add value to its final product and then analyze these activities to reduce costs or increase differentiation. Value chain represents the internal activities a firm engages in when transforming inputs into outputs.

What are the benefits of value chain?

Benefits of value chains

• Support decisions for various business activities.
• Diagnose points of ineffectiveness for corrective action.
• Understand linkages and dependencies between different activities and areas in the business. ...
• Optimize activities to maximize output and minimize organizational expenses.

What is the ultimate test of the value of a corporate level strategy?

whether to integrate backward or forward. The ultimate test of the value of a corporate-level strategy is whether the a. corporation earns a great deal of money.

Which diversification strategy will a firm implement when it operates in multiple industries or markets simultaneously?

A firm implements a corporate diversification strategy when it operates in multiple industries or markets simultaneously. When a firm operates in multiple industries simultaneously it is said to be implementing a geographic market diversification strategy.

What is an example of economic diversification?

Chile is an example of a diversified economy, exporting more than 2,800 distinct products to more than 120 different countries. Zambia, a country similarly endowed with copper resources, exports just over 700 products — one-fourth of Chile's export basket — and these go to just 80 countries.

What is the value of diversity to the economy and society in terms of workforce development?

Diversity fosters a more creative and innovative workforce.

Bringing together workers with different qualifications, backgrounds, and experiences are all key to effective problem-solving on the job. Similarly, diversity breeds creativity and innovation.

What is an example of economic diversity?

For example, a region that relies predominantly on only oil production is not economically diverse, while another that sports a vibrant manufacturing and personal services sector in addition to oil is said to be more economically diverse.

Is diversity good for the economy?

Diversity is integral to a strong economy and inclusive growth. A diverse and inclusive economy is an economy that does not discriminate and treats all its groups on an equal footing. Equal opportunities with respect to education and jobs can generate a wide range of economic benefits.

How does economic diversity impact on life?

A truly diverse workforce cultivates creativity, productivity and innovation by bringing together talent from disparate backgrounds and experiences, who coalesce yet retain their individual identities. Diversity has long been a hallmark of staffing providers.

What is Brunei main source of revenue?

The economy of Brunei, a small and wealthy country, is a mixture of foreign and domestic entrepreneurship, government regulation and welfare measures, and village traditions. It is almost entirely supported by exports of crude oil and natural gas, with revenues from the petroleum sector accounting for over half of GDP.

Why firms need to develop corporate-level strategy justify your reason?

Starting a Big Business

The importance of a corporate strategy hinges on its being an effective means to allocate a company's resources, establish business expectations and improve a company's competitive position, as well as increase shareholder value to something beyond the sum of its physical assets.