Assalamualaikum w.b.t
In that week, miss Ummi informed that the corporate agency should diversify their strategy when:
- technologies and product complement it's present business
- resources and capabilities can be used as valueable competitive assets
- cost reduce b cross-business sharing or transfer of resources and capabilities
- transfer a strong brand name to the product of other business help to increse sales and profit
The corporate agency also need to testing the strategy whether diversification add value for shareholders.
- The attractiveness test = investment as good or better than presnt business?
- The cost of entry test = cost of overcoming entry barries so great as long as delay
- The better-off test= 1+1=3 synergy
Synergy is 1+1=3. It is not 1+1=2. The advantages and disadvantages of synergy are:
Advantages (+)
- quick entry into an industry
- barries to entry avoided
- access to complementary resources and capabilities
Disadvantages (-)
- pay a premium for a successful firm
- overestimating the acquisition's potential to deliver added shareholder value
- underestimating cost for integrating firm
And corporate venturing is process of developing new business as an outgrowth of a firm's established business operations.
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