BUSINESS
STRATEGY
THE BENEFITS OF
DIVERSIFICATION
ENTREPRENEURIAL DIVERSIFICATION:
A MEANS TO SURVIVAL
The aim is to achieve diversification by building on tradition markets to open up new types of
revenue generating activity and maximizing profit.
A Strategy for Survival and Adding Value
This is about the challenges businesses face; there is concern about businesses being under severe
threat of closing. The issue of the closure is compounded by the loss of the additional value. To
examine the conditions, insight should be on the business operations as well as examining the
possibilities offered by a strategy of diversification.
A Realistic Strategy
To determine how businesses can be supported to maximise the success of their attempts to
diversify. The possibilities of diversification would take into caution the climate required to increase
success level of any diversification strategy.
Value, survival, and the evolution of firm organizational structure
Corporate product diversification is a dynamic process. Diversification reduces the mortality rate of
firms. Mature firms pursue diversification strategies partly as a means to exit stagnant business
segments to its impact on the likelihood of diversification, firm age is also likely to affect the
measured value of diversification. However, these multiples may be affected by factors other than
the firm’s organizational structure. Firm age may be a useful proxy for growth opportunities and
other factors that are likely to have profound effect on the market multiples of individual firms.
Circumstances for diversification
Young firms are less likely to add value by diversifying because these firms trade at the largest
discount relative to their age-matched focused peers. It is likely that these firms are sacrificing good
projects for diversification efforts or that their diversification strategy signals poor investment
opportunities in existing business lines.
Firms tend to become more diversified as they age and gro