Corporate Strategy and Diversification
University of Zululand
Faculty of Commerce, Administration and Law
Department of Business Management
Assignment topic: Chapter 7 Summary – Corporate strategy and diversification
Name: Mr T Mdletshe
Student number: 200903233
Module code: CBM 503
Module Description: Advanced Aspects of Management
1. CORPORATE STRATEGY AND DIVERSIFICATION
This chapter is about choices of products and markets for an organisation to enter or exit. Organisations often choose to enter many new products and market areas. For example, Virgin Group started out in the music business, but is now highly diverse. They are operating in the holiday, cinema, retail, air-travel and rail markets. This chapter is not just about commercial businesses. Even small business may consist of a number of business units. However, the owner of that business has to take decisions about the extent of investment and activity in each segment. 2. STRATEGY DIRECTIONS
The Ansoff product/market growth matrix provides ways of generating four basic directions for corporate strategy. According to Ansoff, the organisations basically has a choice between penetrating still further within its existing sphere or increasing its diversity along the two axes of increasing novelty of markets or increasing novelty of products. Diversification involves increasing the range of products or markets served by an organisation. The organisation can diversify related or unrelated products in an existing market. 3.1. Market penetration
Market penetration implies increasing share of current markets with current product rang. This strategy builds on established strategic capabilities and does not require the organisation to venture into uncharted territory. However, organisations seeking greater market penetration may face Two constraints: * Retaliation from competitors. In terms of the five forces, increasing market penetration is likely to exacerbate industry rivalry as other competitors in the market defend their share
Faculty of Commerce, Administration and Law
Department of Business Management
Assignment topic: Chapter 7 Summary – Corporate strategy and diversification
Name: Mr T Mdletshe
Student number: 200903233
Module code: CBM 503
Module Description: Advanced Aspects of Management
1. CORPORATE STRATEGY AND DIVERSIFICATION
This chapter is about choices of products and markets for an organisation to enter or exit. Organisations often choose to enter many new products and market areas. For example, Virgin Group started out in the music business, but is now highly diverse. They are operating in the holiday, cinema, retail, air-travel and rail markets. This chapter is not just about commercial businesses. Even small business may consist of a number of business units. However, the owner of that business has to take decisions about the extent of investment and activity in each segment. 2. STRATEGY DIRECTIONS
The Ansoff product/market growth matrix provides ways of generating four basic directions for corporate strategy. According to Ansoff, the organisations basically has a choice between penetrating still further within its existing sphere or increasing its diversity along the two axes of increasing novelty of markets or increasing novelty of products. Diversification involves increasing the range of products or markets served by an organisation. The organisation can diversify related or unrelated products in an existing market. 3.1. Market penetration
Market penetration implies increasing share of current markets with current product rang. This strategy builds on established strategic capabilities and does not require the organisation to venture into uncharted territory. However, organisations seeking greater market penetration may face Two constraints: * Retaliation from competitors. In terms of the five forces, increasing market penetration is likely to exacerbate industry rivalry as other competitors in the market defend their share