What is diversification strategy? and Why does firm diversify?

Chiến lược đa dạng hóa sản phẩm/ thị trường là chiến lược cho phép doanh nghiệp gia nhập vào thị trường hoặc ngành mới hoặc chưa khai thác với các dòng sản phẩm – dịch vụ mới, bằng cách phát triển năng lực nội bộ hay thông qua mua bán sát nhập, dẫn đến những thay đổi trong cấu trúc, hệ thống quản trị và có thể hình thành quy trình quản lý khác trước đó (Ramanujan và Varadarajan 1989, trang 523- 551). Chiến lược này lần đầu được Ansoff (1957) đề cập và đưa vào là lựa chọn cuối

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Ansoff Matrix: Overview, Business Strategies and Practical Examples

The Ansoff matrix or Market Product development matrix, or market product matrix was developed by a famous researcher – Igor Ansoff in 1975. Until now, The Ansoff matrix has been used as a strategic planning tool for revenue growth at firms’ different market segments; thereby facilitating strategic managers in making decisions. Four growth strategies

Ansoff matrix of Vinamilk – a Vietnamese milk company

Vinamilk has penetrated deeply into the existing markets by expanding the distribution system of existing products such as condensed milk, liquid milk, powdered milk and yogurt … in all provinces with 220 distributors and 125,000 points of sales. In addition, the company has exported its products to foreign markets such as Australia, Cambodia, the

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Related diversification or integration strategy of the firm

Related diversification or integration strategy is a strategy that goes beyond existing products and markets within current capabilities and value networks of the firm. Related diversification strategy includes 2 categories: Vertical integration includes backward integration and forward integration in the firm’s value chain. Backward integration implies the development of activities related to the firm’s

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Unrelated diversification or conglomerate strategy of the firm

Unrelated diversification is a growth strategy, in which firm develops products and markets beyond its capabilities and its value systems. Habitually called the conglomerate strategy, this strategy does not involve neither economics of scale nor economics of scope. However, many costs can occur (e.g., executive management, office administration, relations and decision-making between headquarters and

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Diversification strategy of developing international markets

When deciding to go abroad by adopting international diversification, firm faces two main problems. The first one is the global – local dilemma concerning the standardization level of its products and services, that should be customized between countries in order to meet local market requirements. The second is the business scope, that is, firms

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Diversification and firm competence and performance

In general, scholars agree that core competence of the firm is the primary driver of its successful diversification. In the litterature, there are four different points of views on the impact of the diversification strategy, or the relationship between the degree of diversification and firm

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Corporate Strategy of Downsizing: Definition, Nature and Types

In the mid-1970s, Chales Handy – a professor of management psychology at the London Business School, predicted a revolution that would potentially change the entire economic market by pushing thousands of firms into the situation that he calls “downsizing”. This phenomenon was ignored at that time (Dening, 1996), but has increasingly come true, and

Retrenchment as Corporate Strategy of Downsizing of the firm

Retrenchment is a downsizing strategy, in which the firm concentrate or specialize in one or some particular SBUs. The strategy implementation consists in selling, rebuilding or eliminating complementary and unnecessary SBUs apart core ones of the firm. The ultimate objective of retrenchment aims to gain or regain the competitive advantage and economies of scale,

Downscaling as a corporate restructuring strategy of the firm

Downscaling, as one of downsizing strategies, involves permanent changes in employment size and tangible resources of the firm. In fact, a decrease in tangible resources is synonymous with reduction in the workforce associated; thereby allowing firms to easily survive and enhance their competitive advantage in the market. The majority of firms adopt the downscaling

Downscoping strategy of the firm

Downscoping is one of downsizing strategies, in which, firm divests their capital from some existing SBUs, some market segments or business fields, that are often vertically or horizontally integrated into its supply chain, in order to re-focus on its core business. Downscoping strategy consists of two main processes. First, firm divests from non-core businesses

Challenges facing firms when implement downsizing strategies

When deciding to downsize, firm will face many challenges, including: Survivor syndrome emerges in firm as result of workforce reduction. The rest of the staff may feel their futures uncertain when their colleagues, possibly better than them, are fired. They may always fear their turn to be fired, thereby losing their motivation at work.

Downsizing strategies in pharmaceutical industry

Face to economic crisis, rivalry and rapid technologic evolution, many large pharmaceutical firms adopted the corporate strategy of downsizing by laying off a great number of employees (Essays, 2018). In 2007, because of economic crisis, nearly 80,000 workers lost their jobs; several mergers took place such as Merck-Shering, Pfitzer-Whyeth and Roche-Genentech. Other pharmaceutical firms

The downsizing strategy of General Motors

The General Motors Company is an American multinational automotive manufacturing company headquartered in Detroit, Michigan, United States. It is the largest automaker in the United States and was the largest in the world for 77 years before losing the top spot to Toyota in 2008. General Motors operates manufacturing plants in eight countries. Its