Diversification

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Chapter 13
Diversification
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Tis the part of a wiseman to keep himself today
for tomorrow, and not venture all his eggs in one
basket. - Miguel de Cervantes
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Put all your eggs in one basket and WATCH THAT
BASKET. - Mark Twain
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Leveraging Assets and Competencies
Implement the Business Plans
Assess Assets, Competencies, and Excess Capacity
Identify Business Plans that will Leverage
Assets and Competencies
Figure 13.1
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Related Diversification

• Exporting or Exchanging Assets and Competencies
• Brand Name
• Capacity in Sales or Distribution
• Manufacturing Skills
• RD Skills
• Achieving Economies of Scale

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The Mirage of Synergy

• Potential synergy does not exist
• Potential synergy exits, but implementation
  barriers make it unattainable
• Potential synergy is overvalued

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Unrelated Diversification

• Managing and Allocating Cash Flow
• Entering Business Areas with High ROI Prospects
• Obtaining a Bargain Price for a Business
• The Potential to Refocus a Firm
• Reducing Risk
• Tax Implications
• Obtaining Liquid Assets
• Vertical Integration Motivations
• Defending against a Takeover
• Providing Executive Interest
• Risks of Unrelated Diversification