The advantages and disadvantages of conglomerate diversification are as follows:
Advantages of conglomerate diversification
a. Risk spreading ? entering new products into new markets offers protection against failure of current products and markets.
b. High profit opportunities ? Ability to move into high growth profitable industries especially important if current industry is in decline.
c. Escape ? from the present business if competition is too hot!
d. Better access to capital markets.
Disadvantages of conglomerate diversification
a. The dilution of shareholders earnings if diversification is into growth industries with high P/E ratios.
b. Lack of a common identity and purpose in a conglomerate organization. A conglomerate will be successful only if it has high quality of management and financial ability at head office where diverse operations are brought together.
c. Failure in one business will drag down the rest.
d. Lack of management experience..
Concentric diversification occurs when a firm adds related products or markets. The goal of such diversification is to achieve strategic fit. Strategic fit allows an organization to achieve synergy. In essence, synergy is the ability of two or more parts of an organization to achieve greater total effectiveness together than would be experienced if the efforts of the independent parts were summed. Conglomerate diversification occurs when a firm diversifies into areas that are unrelated to its current line of business. Synergy may result through the application of management expertise or financial resources, but the primary purpose of conglomerate diversification is improved profitability of the acquiring firm. Little, if any, concern is given to achieving marketing or production synergy with conglomerate diversification.
Concentric diversification occurs when a firm adds related products or markets. The goal of such diversification is to achieve strategic fit. Strategic fit allows an organization to achieve synergy. In essence, synergy is the ability of two or more parts of an organization to achieve greater total effectiveness together than would be experienced if the efforts of the independent parts were summed. Conglomerate diversification occurs when a firm diversifies into areas that are unrelated to its current line of business. Synergy may result through the application of management expertise or financial resources, but the primary purpose of conglomerate diversification is improved profitability of the acquiring firm. Little, if any, concern is given to achieving marketing or production synergy with conglomerate diversification.
one is JG Summit Holdings- conglomerate firm with numerous unlike business industries
The advantages and disadvantages of Aalaamal business across the internet
what is divestiture?
disadvantages- unlikely economic benefits will be generated for the target or the bidder advantages- diversification
Conglomerate diversification helps to spread risk, allowing protection for new products against failure, as well as providing movement into high growth industries from declining industries. However, the spreading can wear the earnings of shareholders thin, and any one failure can drag down the other members of the conglomerate.
advantages 1. more money 2.more jobs 3.tourism disadvantages 1.no local support 2.misuse of funds 3.imbalance of trade
Wal-Mart
Concentric diversification occurs when a firm adds related products or markets. The goal of such diversification is to achieve strategic fit. Strategic fit allows an organization to achieve synergy. In essence, synergy is the ability of two or more parts of an organization to achieve greater total effectiveness together than would be experienced if the efforts of the independent parts were summed. Conglomerate diversification occurs when a firm diversifies into areas that are unrelated to its current line of business. Synergy may result through the application of management expertise or financial resources, but the primary purpose of conglomerate diversification is improved profitability of the acquiring firm. Little, if any, concern is given to achieving marketing or production synergy with conglomerate diversification.
Concentric diversification occurs when a firm adds related products or markets. The goal of such diversification is to achieve strategic fit. Strategic fit allows an organization to achieve synergy. In essence, synergy is the ability of two or more parts of an organization to achieve greater total effectiveness together than would be experienced if the efforts of the independent parts were summed. Conglomerate diversification occurs when a firm diversifies into areas that are unrelated to its current line of business. Synergy may result through the application of management expertise or financial resources, but the primary purpose of conglomerate diversification is improved profitability of the acquiring firm. Little, if any, concern is given to achieving marketing or production synergy with conglomerate diversification.
There are a number of disadvantages of diversification. Some of them include overuse of resources, it may affect level of production and so much more.
to maximize the profit
Reliance is pursuing unrelated diversification strategy, it is conglomerate and has expanded into various markets; namely power sector, telecommunications, infrastructure, retail etc.
one is JG Summit Holdings- conglomerate firm with numerous unlike business industries
Advantages and Disadvantages of equity
advantages and disadvantages