Explain the differences among the following levels of diversification in terms of the two value-creating strategies: related constrained, related linked, and unrelated. Define the two value-creating strategies.
What will be an ideal response?
The two value creating strategies of diversification are operational and corporate relatedness. Operational relatedness involves sharing resources and activities between businesses. Corporate relatedness involves transferring core competencies between some of the organizations businesses through corporate headquarters. The related constrained strategy uses high levels of operational relatedness and low levels of corporate relatedness. The related linked strategy uses high levels of corporate relatedness and low levels of operational relatedness. The unrelated strategy relies on neither type of relatedness.
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