This chapter covers the following objectives:

  • The reasons for the failure of many diversification efforts.
  • How managers can create value through diversification initiatives.
  • How corporations can use related diversification to achieve synergistic benefits through economies of scope and market power.
  • How corporations can use unrelated diversification to attain synergistic benefits through corporate restructuring, parenting, and portfolio analysis.
  • The various means of engaging in diversification – mergers and acquisitions, joint ventures/strategic alliances, and internal development.
  • Managerial behaviors that can erode the creation of value.