Related diversification is the strategy of operating a business unit in a new industry that is related to a company's existing business units through some commonality in their value chains.

Question

Quizplus · Accepted Answer

Related diversification involves expanding into an industry that has some connection or similarity to a company's existing business units, such as sharing supply chains, distribution channels, technology, or customer base. This enables the company to leverage its existing resources, capabilities, and brand equity to create synergies and capture new growth opportunities. By contrast, unrelated diversification involves entering an industry that has no obvious link to a company's core competencies or market position, which involves greater risk and requires more investment and restructuring.

Related Diversification Is the Strategy of Operating a Business Unit