Business Policy & Strategy Chapter 6

BUS 451
6 June 2011
Chapter 6

1. What is corporate direct dodging and wherefore is it important?
Specifies actions a firm takes to gain a agonistic advantage by selecting and managing a group of different commercial enterprise competing in different product market. It helps companies select new strategy positions that argon expected to increase the firms value.

2. What be the different takes of diversification firms can pursue by victimization different corporate-level strategy?
Diversified firms vary according to their level of diversification and the connections amid and among their business.
* Low levels of diversification: uses either a single or a ascendent business, corporate level diversification strategy.
Single business: 95% or more(prenominal) of the revenue comes from a single business.
Dominant business: in the midst of 70% and 95% of revenue comes from a single business.
* castigate and lofty levels of diversification: A firm generating more than 30% of its revenues outside a dominant business and whose business be link to each other in some personal manner uses a related to diversification corporate level strategy. When the link up between the diversified firms business are rather direct, a related constrained diversification strategy is being used.




A highly diversified firm that has no relationship between its businesses follows an unrelated diversification strategy.
* Moderate to high levels of diversification: related constrained: less than 70% of revenue comes from the domain business, and all business share product, technological, and distribution linkages.
Related linked (mixed related and unrelated): less than70% of revenue comes from the dominant business and there are only limited links between business.
Very high levels of diversification:
Unrelated: Less than 70% of revenue comes from the dominant business, and there are no common links between businesses.

3. What are the 3 reasons firms choose to diversify their operations?
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