Competitive Advantage of an Unrelated Diversified Company

Abstract

A company is diversified when it is in two or more lines of business. Companies pursue unrelated diversification strategy when they enter into a new activity that has no obvious similarities with any of the company’s existing activities. This is often risky for a company with strengths in one industry or product to tackle a completely unrelated industry, but the potential benefits are also significant for businesses that succeed with this growth strategy. This paper reviews the competitive advantage of unrelated diversification and concludes that the critical factor in determining success is the level of management expertise in formulating and implementing the unrelated diversification strategy.
Key words: Diversification; Unrelated diversification; Competitive advantage