Advantages of staying in one industry.
Focus resources and capabilities on competing successfully in one area.
Focus on what tgr company knows and does best.
Disadvantages of staying in one industry.
Danger of industry declining.
Missing the opportunities to leverage the resources and capabilities to other activities.
Resting on laurels and not continuing learning.
Concepts of making diversification work. (3 major)
What businesses should corp compete in?
How should businesses be managed to jointly create more value than if they were freestanding units?
Manage additional businesses-Apply excess resources, capabilities & core competencies that have multiple uses.
Motivation of diversification. (4)
Seeking market power
Aspects of Seeking Growth. (a motivation for diversification)
Better external opportunities
Acquire new capabilities
Response to intensifying competition
Avoiding decline and takeover
Benefits to management and employees
Aspects of Market Power. (a motivation for diversification)
Gains in pricing authority
Increasing bargaining power
Forebearance - keep competitor at bay
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