Friday 6 December 2013

CORPORATE STRATEGY : DIVERSIFICATION AND THE MULTIBUSINESS COMPANY

Assalamualaikum w.b.t....

What I understand from this chapter, corporate strategy means start diversify more than one industry.

Strategies Diversification Option have four which is :

   1) Sticking closely with the existing business lineup and pursuing opportunities presented by these businesses.

 eg : Affin Bank acquire Hwang-DBS, financial can be strong.


2) Broadening the current scope of diversification by entering additional industries.

eg : Tabung Haji not only manage people who want to make pilgrimage, but Tabung Haji have invest plantation and property.


3) Divesting some businesses and retrenching to a narrower collection of diversified businesses with better overall performance prospects.



4) Restructuring the entire firm by divesting some businesses and acquiring others to put a whole new face on the firm's business line up.



Three test before enter into industry


  1. The Attractiveness Test : profits and return on investment as good or not.
                                                        Business focused- new entrance,supplier and other                                                   five forces
                                               conclusion - industry attractiveness

     2. The cost of Entry Test : cost overcoming entry barriers so great or reduce the potential for profitability.

    3. The Better-Off : synergy ( 1+1=3) - more than, not making only. It provides the best     company.

Intrapreneurship - everybody in company can create any idea to provide product.

Economic of Scale - the units price of goods little, produced many.

Economic of Scope - produce the same number with the low price.

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