This PPT slide, part of the 69-slide Corporate Strategy Primer PowerPoint presentation, presents a structured overview of different forms of diversification, categorized into 3 main types: horizontal unrelated, related, and vertical integrated. Each type is accompanied by key characteristics that highlight how they contribute to corporate value and administrative structure.
For horizontal unrelated diversification, the focus is on governance economies. This implies that divisions operate independently, which can lead to competitive dynamics where managers vie for resources and recognition. This independence can foster innovation, but may also create silos that hinder collaboration.
Related diversification emphasizes scope economies, indicating that divisions can leverage shared resources or capabilities. This cooperative structure allows for interdependence among divisions, enhancing overall efficiency and effectiveness. The potential for synergy is significant, as divisions can support each other in achieving common goals.
Vertical integration is characterized by coordination economies. Here, divisions are inter-supportive, which means they work closely together to optimize processes across the supply chain. This can lead to improved efficiency and reduced costs,, but it may also impose constraints on divisions, limiting their flexibility.
The slide effectively outlines how each form of diversification impacts corporate strategy and operational dynamics. Understanding these distinctions is crucial for executives considering diversification as a growth strategy. It highlights the importance of aligning organizational structure with strategic objectives to maximize value creation. The insights provided can guide decision-making processes, ensuring that the chosen diversification strategy aligns with the company’s overall goals and capabilities.
This slide is part of the Corporate Strategy Primer PowerPoint presentation.
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Strategy Development Growth Strategy Supply Chain Corporate Strategy Value Creation Organizational Structure Innovation Governance
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