The following four objectives appear to motivate most decisions to diversify: • To grow. Growth seems to be an implicit objective in nearly all organizations, and many managers pursue diversification strategies in order to maintain growth in sales and profitability beyond what their firms' core businesses can provide. Stock markets appear to reward growth companies, which may further encourage many managers to pursue growth through diversification. • To more fully utilize existing resources and capabilities. Managers may also pursue diversification strategies because they believe their firms possess underutilized resources or capabilities that can be further exploited by diversifying into other markets or industries.
These new acquisitions should also be given time to ensure that they have fully established themselves before he moves to more acquisitions. In doing so, he would be laying a solid foundation for his firm that would be difficult to be demolished if an economic crisis hit
Therefore, they were able to provide the garter range of products and services to the market and therefore, they are well diversified company now. Therefore, their strategies purely based on the market diversification strategies where they always try to go for new products and new markets. Market Development Diversification Market Penetration Product Development With reference to the shifting process through Ansoff matrix following can be observed. Initially they have promoted existing products to existing market and after that they develop the existing products with new features. After that they have expanded their products to new market.
Related diversification and unrelated diversification. Diversification is a corporate strategy to go into another business sector or industry which the business is not at present in, whilst additionally making another item for that new market. This is most risky section of the Ansoff Matrix, as the business has no involvement in the new market and does not know whether the item will be effective. Related diversification is a key change in which the organization differentiates be entering new industry yet dependably enters business in that industry at the same focus of gravity. A thankfulness for the level of relatedness is expected to gauge the measure of vital change that is being endeavored.
In view of the revenue levels of the Inter Akea Group and the amount of financial expenses it is a prudent decision to acquire a fund management firm. Acquisition is defined as “a purchase of a company or a part of it so that the acquired company is completely absorbed by the acquiring company and thereby no longer exists as a business entity.” Takeover is considered as a form of acquisition. The strategic motives behind acquisition activities are as follows: Expansion and growth- If allowed by the government, expansion and growth through Acquisition is less time consuming and more cost effective Dealing with the entry of MNCs- Merger or joint venture is a possible strategy for survival with the arrival of MNCs. It may be difficult to beat the MNCs without strategically aligning with them. The following financial motives may necessitate the acquisition activities: Deployment of surplus funds- The cash rich companies always look around to takeover cash strapped companies with a view to deploy surplus funds in investable
The key to the success is the process of Newellization which was mentioned earlier. Taking a glance at Exhibit – 3, the major acquisitions are in line with Newell’s goals, their product line and their strategy of expansion. And given the size of the company, the product line and number of successful acquisitions, it can be inferred that Newell has an effective corporate strategy. Ways by which Newell enhance Competitive advantage of its business. • Acquisition: Newell knew that to remain in the market and keep growing on year on year basis, it has to keep expanding and add new product lines to its business.
EXECUTIVE SUMMARY • This is a study that shows the various entry and expansion strategies that are available for a firm when choosing to go global or increase market share within the market. • There are various strategies found out , they are : Exporting and importing , Joint Ventures, Strategic Alliances, Franchising , Licensing and Foreign branching. • In exporting and importing, firms choose between direct involvement and indirect involvement. This is the level of involvement with the foreign customers. Most firms prefer direct involvement due to the costs and risk of having an intermediary do the communicating in the foreign market.
Mergers and acquisitions should be used to amplify strategies and growth. This business deal should facilitate the right combination of 4P’s-People, Processes, Product and Presence. The merged entity has to coordinate and deal with the 4P’s very efficiently and effectively. It has to cater to a more diversified and huger customer-supplier base, synergies of prices and costs, a wider range of products and services, and finally increase its visibility through tapping the right market. There has been a steady increase in the number of M&A transactions, nationally and globally due to various drivers like increasing visibility through establishing brands, decrease tax liabilities, jettison competition, revitalise loss making firms and corporations
The developer of this models argued that companies while going international select to penetrate in those market which are physically close and then gradually move to those countries which are physically are at distance. Further companies will adopt those modes of internationalization which involves least commitment. Initially companies having least knowledge about the foreign market may only go for exporting the products and as their knowledge improves they may go with stronger commitment (Karadeniz, 2007). Increased knowledge reduces the risk of failure in international market with strong control on process and
There are two types of diversification namely, related and unrelated. In related diversification, companies acquire such businesses that are related to their own business. It helps the organisations to share their competencies, develop market power, share raw material and suppliers and also production of common products together. In unrelated diversification, organisations tend to acquire businesses from other industry as well. The focus is on the good investment for the organisation.