What is Related Diversification?It

What is Related Diversification?It is when a business adds or expands its existing product lines or markets. For example, a phone company that adds or expands its wireless products and services by purchasing another wireless company is engaging in related diversification.With a related diversification strategy you have the advantage of understanding the business and of knowing what the industry opportunities and threats are; yet a number of related acquisitions fail to provide the benefits or returns originally predicted.Why? It is usually because the diversification analysis under-estimates the cost of some of the softer issues: change management, integrating two cultures, handling employees. layoffs and terminations, promotions, and even recruitment. And on the other side, the diversification analysis might over-estimate the benefits to be gained in synergies.

What is Related Diversification?
It is when a business adds or expands its existing product lines or markets. For example, a phone company that adds or expands its wireless products and services by purchasing another wireless company is engaging in related diversification.

With a related diversification strategy you have the advantage of understanding the business and of knowing what the industry opportunities and threats are; yet a number of related acquisitions fail to provide the benefits or returns originally predicted.

Why? It is usually because the diversification analysis under-estimates the cost of some of the softer issues: change management, integrating two cultures, handling employees. layoffs and terminations, promotions, and even recruitment. And on the other side, the diversification analysis might over-estimate the benefits to be gained in synergies.

What is Related Diversification?
It is when a business adds or expands its existing product lines or markets. For, example. A phone company that adds or expands its wireless products and services by purchasing another wireless company is engaging. In related diversification.

.With a related diversification strategy you have the advantage of understanding the business and of knowing what the industry. Opportunities and threats are; yet a number of related acquisitions fail to provide the benefits or returns originally predicted.

, Why? It is usually because the diversification analysis under-estimates the cost of some of the softer issues: change, managementIntegrating, two cultures handling employees. Layoffs, and terminations promotions and even, recruitment. And on the other. Side the diversification, analysis might over-estimate the benefits to be gained in synergies.
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