To Diversify or Not to Diversify

Diversification is a social club strategy where a federations goal is to increase profitability through change magnitude sales volume from new products and new markets. It allows a companion to venture out into new lines of business that are contrary from present operations. Companies choose to commute for a host of contrasting reasons. A major reason companies make the decision to diversify is to achieve synergy, making it possible for two or more(prenominal) parts of an organization to achieve greater total posture or profitability than what would have been possible for a maven entity. (Investments, 2010)
There are advantages and disadvantages to company diversification. Diversification piece of ass answer the companies to achieve their potential in a developing economy. A strong brand name can help in leveraging the new products that belong to that brand. Diversification strategy can help a company in spreading their guest base. It also helps in enhancing the product portfolio of the company by introducing complimenting products in the market. (Investments, 2010) However, if internal management and personnel issues are not interpreted into consideration in view of a merger or acquisition, the whole diversification could end disastrously.



When considering the possibility of acquiring a new company, one needs to ensure that the people at the managerial level are well-versed with the process that needs to be followed for the company to be acquired. In addition, lack of knowledge around the newly acquired business and its marketing strategies can lead the company to financial ruin. Accuracy in determining the tar consume component is the key to a successful diversification strategy of a company at the end of the day. (Investments, 2010)
In August 2005, sprint acquired a majority stake in Nextel Communications in a $35 billion stock purchase. By gaining access code to each others customer bases, both companies hoped to grow by pass over selling their product and service offerings. These two companies believed...If you want to get a full essay, order it on our website: Ordercustompaper.com



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