Assalamualaikum w.b.t to all of
you. How are you today? I hope all of you are in a good condition with full
bless from Allah. J
Today we will continue with our
learning session in Strategic Management under the topic of Diversification and
the Multibusiness Company. This topic is discussing on how a top management may
diversified the business in many parts.
In order to have diversification
or multibusiness, we have to have a look on the reason why we need to have the
diversification. The other factors, advantages and disadvantages also are the
main things that have to be analyze before we make the diversification of the
business. Now, I will tell you three types of diversification which there are:
- Joint venture
- Acquisition
- Internal Development
In Malaysia, we have many
examples of the companies that has been diversified their business into many
other sub business unit. We have Sime Darby, Tabung Haji and Khazanah Nasional
Berhad. For Sime Darby, they have Sime Darby Property, Sime Darby Plantation,
Sime Darby Industrial, Sime Darby Motors and Sime Darby Energy and Utilities. This is how this company diversify their business
either in the related business or in unrelated business.
Any firms that wish to have
diversification in their business should consider this factors:
- It can expand into business where the technologies and product complement its current product
- It have enough resources and capabilities to be use
- Cost can be reduced by cross-business sharing or transfer of resources and capabilities
- Transferring a strong brand name to the product of other businesses
Last but not least, for those who
currently own a business and plan to have a diversification to their business,
all the factors stated above has to be consider. I hope my simple explanation
on this topic will give you some brief idea about diversification of a business.
Thank you. Wassalam.
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