Strategic Overview of Diversification Forms PPT
This PPT slide, part of the 69-slide Corporate Strategy Primer PowerPoint presentation, outlines the various forms of diversification that organizations can pursue, categorized into 3 distinct types: horizontal unrelated, related, and vertical integrated. Each category is accompanied by insights on corporate value added and administrative structure, providing a comprehensive view of how these forms operate within a corporate framework.
In the horizontal unrelated category, the focus is on governance economies. Here, divisions operate independently, leading to a competitive environment where they vie for capital and managerial promotions. This structure can foster innovation, but may also result in inefficiencies due to lack of synergy.
The related diversification form emphasizes scope economies. Divisions in this model are interdependent, promoting cooperation among them. However, this interdependence can lead to dysfunctional competition if not managed properly. The potential for shared resources and capabilities can enhance overall performance,, but it requires careful oversight to ensure that competition remains healthy.
Vertical integration is characterized by coordination economies. In this model, divisions are inter-supportive, which can streamline operations and enhance efficiency. However, this structure can also create constraints if divisions become too reliant on one another, leading to dysfunctional competition. The balance between support and competition is crucial for maintaining an effective operational flow.
Overall, this slide serves as a strategic overview for executives considering how to structure their organizations for optimal performance across different diversification strategies. Understanding these dynamics can help in making informed decisions about resource allocation and organizational design.
This slide is part of the Corporate Strategy Primer PowerPoint presentation.
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Growth Strategy Strategy Development Organizational Design Corporate Strategy Innovation Governance
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