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Diversification Through Acquisition: Strategies for Creating Economic Value [Salter, Malcolm S.] on *FREE* shipping on qualifying offers. Diversification Through Acquisition: Strategies for Creating Economic ValueCited by: Diversification acquisition is a corporate action whereby a company takes a controlling interest in another company to expand its product and service offerings.
One way to determine if a takeover comes under diversification acquisition is to look at the two companies Standard Industrial Classification (SIC) codes. Diversification has long been a strategic decision that is often made to increase the corporation’s presence on the market either through internal growth methods or external means like acquisition of other companies in order to diversify the type and quality of products to cover a maximum part of the market and increase their reach to a wide Cited by: 1.
journal in diversification strategy area between andthis study maps a knowledge network of diversification strategy studies. The results of the mapping can help identify the research direction of diversification strategy research and provide a valuable tool for researchers to access the literature in this Size: KB.
Diversification strategy probably takes place, when company or business organizations introduce a new product in the market. These strategies are known as diversification strategies. There are three types of diversification strategies. Diversification strategy actually minimizes the risk of loss in a business organization by splitting different.
Strategic M&A: Seeking a solution to a business problem. There Strategic analysis in diversification through acquisition book essentially two kinds of mergers and acquisitions: strategic and financial. A financial merger or acquisition is pursued, as the name implies, for financial reasons—often to pick up some quick cash or as an investment.
Start studying Chapter 8 "Corporate Strategy: Diversification and the Multi-business Company". Learn vocabulary, terms, and more with flashcards, Strategic analysis in diversification through acquisition book, and other study tools.
Facebook’s Diversification is an Ingenious Growth Strategy Facebook started out as a college re-union social network with games and has evolved into an all-purpose destination that is replacing the otherwise unconnected multiple sites we once had to separately log into to do various tasks such as; emailing, instant messaging, video sharing.
See our full analysis for Coca-Cola Strategic Tie-Up With Key Local Player Can Boost Revenues Chi Ltd. was the leader in the Nigerian juice industry inwith a 48% off-trade volume : Trefis Team. Strategic Analysis Tools Topic Gateway Series 5 One of the key skills of a strategic analyst is in understanding which analytical tools or techniques are most appropriate to the objectives of the analysis.
Below is an overview of some of the more commonly used strategic analysis tools. SWOT analysis. The growth through acquisition strategy also recognizes lateral acquisitions.
The aim of such merger is common objective to pool resources. Pattern of Growth Through Acquisition Strategy. The sole objective of growth through acquisition strategy is to gain market share, acquire greater resource and ensure business expansion.
The analysis provides management and the board of the acquiring company with information both to make a decision on the candidate and to formulate an effective negotiating strategy for. Diversification strategy.
The Ways for Related Diversification. An analysis of the practices of various diversified companies reveals that they seek related diversification in either of the two ways or a combination of the two. Unrelated diversification through acquisition of other firms requires a sound screening from among the.
Because it leverages strategic fit, companies that engage in related diversification are more likely to achieve gains in shareholder value.
Related diversification occurs when a firm moves into a new industry that has important similarities with the firm’s existing industry or industries. Many firms accomplish this through a merger or an acquisition, while others expand into new industries without the involvement of another firm.
Three Tests for Diversification. A proposed diversification move should pass three tests or it should be rejected (Porter, ). How attractive is the industry that a firm is considering entering. Conglomerate diversification. In this form of diversification, an entity launches new products or services that have no relation to the current products or distribution channels.
A firm may adopt this strategy to appeal to an all-new group of customers. This is a Case analysis project of Google Inc. in It highlights Google's managerial perspectives using Strategic management analytical tools such as the Porter's 5 Author: Rex Sitti.
Cisco Systems plans to dominate its market and is well on the way, having acquired 14 companies since While many acquisitions bring with them attendant stress, Cisco has more than doubled its sales and net income in The secret: not just buying, but finding organizational synergies prior to the purchase.
Disney access to several comic book characters, such as Spider-man, X-Men, Captain America and Thor. The Marvel purchase should prove to be lucrative as Disney presents the various characters through its many systems.
In OctoberDisney acquired Lucasfilm from George Lucas for $4 billion in cash andCited by: 1. Diversification is a growth strategy of entering product markets different from those in which the firm is currently engaged. A diversification strategy can be implemented by either acquisition, merger or a new business venture.
This strategy can be categorized as a related or an unrelated diversification. Diversification Strategy in Internet Industry: Case of Google Inc. Relationship Between Acquisition Strategy and Core Business Activity. With the diversification created through. Diversification Diversification is the most risky of the four strategies.
This is because it involves all of the complexity and risk of Market Development and Product Development at the same time. This is why businesses often pursue diversification through acquisition.
PepsiCo's Diversification Strategy in Will the Company's New Businesses Restore Its Growth. 2 connect John E. Gamble Texas A&M University-Corpus Christi PepsiCo was the world's largest snack and beverage company, with net. Salter, Malcolm S., and Wolf A. Weinhold. Diversification through Acquisition: Strategies for Creating Economic Value.
Free Press, Cited by: Diversification. Diversification means growing outside a company's current industry category. Many companies pursue diversification to varying degrees. In this chapter, we examine pros and cons of a merger and acquisition (M&A) diversification strategy.
In doing so, we look at the performance of companies that have pursued diversifying acquisitions. A corporate shared-activities strategy can be initiated through acquisition or startup, but it requires a strong sense of corporate identity and a team oriented incentive system to be successful.
Successful coordinated sharing meets the. Strategy Formulation. Strategies for Growth and Diversification Identifying Growth Strategies Methods for Diversification Acquisition of an existing business Creation of a new business from within, e.g.
a start-up Joint venture with another firm or firms Strategic Analysis. Advance your strategic analysis skills in this follow-up to Foundations of Business Strategy. In this course, you'll learn the tools to analyze strategy across time (competitive dynamics), industries (corporate strategy), geographies (international strategy), and institutions (non-market strategy).
Now, at its heart, the acquisition analysis is essentially a cost-benefit analysis. We're trying to understand if the potential strategic benefits outweigh the potential costs associated with making that acquisition.
And it might useful to think about an acquisition analysis. Diversification Through Acquisition: Strategies for Creating Economic Value by Salter, Malcolm S. and a great selection of related books, art. The business diversification strategy is what companies’ do (increasing the sales volume) in order to increase their profits.
The increase in the volume of sales can be done by developing new products and targeting new market. The diversification strategy can be used at the unit level of a business as well as in their corporate level.
diversification approach, unrelated diversification approach does not care for achieving strategic fits between the value chains of different businesses.
The Company rather invests in new businesses in different industries with high profit opportunities. Financial gain is the main focus; strategic fit is a secondary consideration.
The _____ diversification strategy creates value in two ways. First, since the core competence has already been developed in one business, the firm does not have to allocate resources to develop it. Second, since the resource is intangible, competitors cannot easily imitate it.
Portfolio theory: A strategy based primarily on diversification through acquisition. The corporation shifts resources among the units and monitors the performance of each business unit and its leaders.
Each unit generally runs autonomously, with limited interference from the corporate center provided goals are met. The Rayovac case discusses the companys bold and risky acquisitions strategy as it diversifies into personal care and grooming, lawn and garden care, insecticides and pet foods.
The company assumes. PEPSICO Diversification Strategy. PEPSICO diversification strategy is a plan introduced by the company to include snacks and other various beverage brands into its already existing product range. PEPSICO is a renowned beverage, food and snack company headquartered in the US.
Value creating diversification strategy – Cisco is able to obtain value by diversification into new product divisions (grew from 2 to 7 major product categories) through acquisitions, internal innovation efforts, in more international markets(grew to 30 consumer markets), Benefits: This strategy enables them to block competitors market.
Related diversification occurs when a firm moves into a new industry that has important similarities with the firm’s existing industry or industries (Figure The Sweet Fragrance of Success: The Brands That “Make Up” the Lauder Empire).Because films and television are both aspects of entertainment, Disney’s purchase of ABC is an example of related diversification.
The first systematic empirical analysis on implications of different types of diversification can have on performance have been realized during the ’70s, these as analysis suggested at least in the U.S. strategy of related diversification (presence in more business very similar) had achieved the performance better than the conglomerate.
The strategies of diversification can include internal development of new products or markets, acquisition of a firm, alliance with a complementary company, licensing of new technologies, and distributing or importing a products line manufactured by another firm.
Generally, the final strategy involves a combination of these options. Pepsi co diversification strategy case analysis 1. Case Analysis Purpose To analyze how the PepsiCo’s diversification strategy has maximized the shareholders value. To identify problems, opportunities, and strategic actions that would sustain its impressive financial and market performance.
2.As the company purchasesan e-book company, a related business therefore, this diversification will be considered as related diversification.
By acquiring Fictionwise Company, Barnes and Noble can provide e-book services on phones and PCs hence this diversification will increase the overall value of the company.Rayovac Corporation: International Growth and Diversification through Acquisition Case Solution.
SWOT Analysis of the Company. In order to analyze the internal as well as the external strengths and weaknesses of the company, and in order to come up with their overall global strategy, a SWOT Analysis is performed.