Performance differences between the wrigley/rumelt strategic categories

Strategy research has a long‐standing interest in the performance consequences of corporate diversification. In theory, resource sharing should yield economic benefits in related multi‐business firms, but the extensive empirical research remains equivocal. To explore this paradox, this paper examines the process of implementing a related diversification strategy. Working from existing theory, a formal model is constructed that describes the process and performance implications of a related diversification move. The model is analyzed using computer simulation, and the analysis suggests that successful diversification strategies require managerial policies that maintain organization slack. In the absence of such policies, related diversification can negatively impact firm performance even when substantial synergy opportunities exist. The analysis also demonstrates, contrary to existing theory, that diversification strategies based on a very high degree of relatedness can lead to lower performance than less related strategies in some circumstances. Counter‐intuitively, extracting potential synergies may require additional investment in shared resources. Copyright © 2005 John Wiley & Sons, Ltd.

An assessment of the diversification–performance linkage: An empirical comparison between Turkish and Italian firms

The empirical investigation of relation between the diversification and financial strategies of firms has been an area of interest for studies in recent past. The present study attempts to address the significant issues related to diversification on Indian Firms. It precisely tries to explore whether there is any relationship between Extent of and of Selected Indian Firms? Is there any relationship between Diversification and of Selected Indian Firms? An empirical analysis of the extent of diversification and diversification strategy of top 30 companies (Market Capitalisation) listed in the Bombay Stock Exchange is done for a single period (2015-16) by using ANOVA. Bankruptcy risk, systematic risk, unsystematic risk, leverage and firm size are the variables used to measure Financial Strategy of Firm and NIC codes are used to measure extent of diversification while diversification strategy is defined in terms of mode of entry adopted by the firm for new business. The results of the study show that diversified firms are at higher level of risk- particularly unsystematic and Bankruptcy risk. Moreover, no significant relationship was observed in mode of entry and Financial Strategy of the firm. This study is expected to help mangers in taking diversification decisions.

Research summary: Prior theory suggests that the performance effects of a firm's diversification strategy depend on a firm's individual resources and capabilities and the setting within which it is operating. However, prior tests of this theory have examined the average diversification‐performance relationship across all firms, instead of estimating the diversification‐performance relationship at the individual firm level. Efforts to estimate this average relationship are inconsistent with a central assumption of much of strategic management theory—that firms maximize value by choosing strategies that exploit their heterogeneous resources and individual situation. By adopting an approach that allows an evaluation of the diversification‐performance relationship for individual firms, this article shows that firms, both focused and diversified, tend to choose that diversification strategy—focus, related diversification, or unrelated diversification—that maximizes value . Managerial summary: Instead of a universal diversification discount or premium, this article shows that the effect of diversification on performance is heterogeneously distributed across firms and that firms tend to be rational in their diversification decisions . Copyright © 2015 John Wiley & Sons, Ltd.

This article analyzes the impact of ownership structure on corporate diversification, with reference to large listed family business groups. By considering agency theory and socioemotional wealth, the study examines the relationship between family ownership, concentration of ownership, and degree and type of diversification. The study considers 99 Spanish listed business groups (50 family‐controlled‐ and 49 nonfamily‐controlled groups) and considers diversification of business group as the focus of analysis. The results show how family business groups present a lower preference for unrelated diversification than related diversification. There is also a nonlinear relationship between the concentration of ownership in family groups and the degree of diversification, showing different behaviors in family groups according to shares owned by the family's leading shareholders. This article contributes to the literature by providing a more precise identification of the corporate strategy adopted by business groups and establishing new evidence about the impact of family control on diversification strategies and the differences regarding nonfamily business groups.

Purpose: For any organization to succeed in the present competitive and ever-changing business environment, understanding the risks, opportunities, and strength posed by the external environment is inevitable. Organizations must exploit opportunities and avoid risks by applying relevant strategies and developing various strategic approaches that will improve their competitive edge and overall performance. One of the possible ways to improve business efficiency and performance is through diversification. The purpose of this study was to assess the applicability of a diversification strategy as a game plan to motivate and develop resilience against organizational and environmental forces in business operations to improve organizational performance in star rated hotels in the Coastal Kenya. The specific objectives was; to determine the impact of related diversification strategies on organizational performance among star rated hotels in coastal Kenya Coastal.
 Materials and Methods: Notably, 36 star rated hotels were selected while 419 respondents were involved which comprised; strategic managers, tactical and operational managers. This represented a response rate of 92.4% and 80.6% for the questionnaires and interviews respectively. Stratified sampling was used to select the hotels while purposive sampling was used to select the managers. Questionnaires and interview schedules were used during data collection. Data analyze was both analyzed using both descriptive and inferential analysis. The mean for overall adoption of horizontal diversification strategies was 3.94 (std. dev=0.92) while vertical diversification strategies was 3.28 (std. dev=1.13) which was significant. The mean on overall adoption of related diversification strategies was 3.60 (std. dev=0.95), demonstrating that related diversification strategies have on overall been adopted to a large extent.
 Findings: The model summary results indicates that R-Square=0.598; this implies that 59.8% of performance is explained by vertical and horizontal diversification strategies. This implies that, both horizontal and vertical diversification strategies were significantly adopted in the operation and management of hotel business in the coast region of Kenya. The null hypothesis stating, “There is no significant relationship between vertical diversification strategies and performance of star rated hotels along the Kenyan Coast” was rejected. This means that horizontal and vertical diversification strategies are significant predictors of performance of star rated hotels in the Kenyan Coast. From the regression model, horizontal and vertical diversification were found to have a positive effect that was statistically significant on performance of star rated hotels in the Kenyan Coast.
 Implications to Theory, Practice and Policy: Policy makers should initiate policies that motivate organizations such as hotels to practice diversification to minimize negative impact on both financial and non-financial performance aspects.

Nowadays, organizations must exploit opportunities and avoid risks by applying relevant strategies and developing various strategic approaches that will improve their competitive edge and overall performance. One of the possible ways to improve business efficiency and performance is through diversification in light of available government policies and regulations. The purpose of this study was to evaluate the moderating effect of government policies and regulations on diversification strategies and organizational performance amidst organizational and environmental forces within star rated hotels in the coast region of Kenya. The specific objectives were; to determine the moderating effects of government policies and regulations on the relationship between diversification strategies and organizational performance among star rated hotels in the Kenyan Coast. Notably, 36 star rated hotels were selected while 419 respondents were involved which comprised; strategic managers, tactical and operational managers. This represented a response rate of 92.4% and 80.6% for the questionnaires and interviews respectively. Stratified sampling was used to select the hotels while purposive sampling was used to select the managers. Questionnaires and interview schedules were used during data collection. Data analyze was both analyzed using both descriptive and inferential analysis. The model summary results indicate that R-Square value improves (from 0.598 to 0.617) when the moderating variable (Government policies and regulations) was added to the regression model. This means that government policies and regulations improve the relationship between related diversification strategies and performance of star rated hotels in the Kenyan Coast. The model summary results in Table 5 show that the value of R-Square improves from 0.558 without the moderating variable to 0.670 with the moderating variable. The moderating variable therefore improves the relationship between unrelated diversification strategies and performance of star rated hotels in the Kenyan Coast. The null hypothesis “Government policies and regulations do not have a significant moderating effect on the relationship diversification strategies with performance of star rated hotels in the Kenyan Coast” was rejected. In conclusion, government policies and regulations have a significant moderating effect on the effect of diversification strategies on performance of star rated hotels, annihilating the simple linear relations between predictor and outcome variables. The government should encourage diversification among hotel industry by providing favourable environment to conduct business through reduced tax and subsidies especially during economic turbulence.

The purpose of this article is to study the influence of internal governance mechanisms on the diversification and growth strategy of Saudi firms in the non-oil sector. Considering a sample of 70 Saudi companies observed over the period 2006-2014 and using the Linear Regression method, correlated panels, corrected standard errors (PCSEs). Our empirical results show the structure of the board of directors that motivates Saudi firms to run less risk and diversify all activities rather than refocus the group's activity. We have shown that the presence of the largest shareholder has a positive effect on the diversification strategy. These results support our basic assumptions that firms with a high concentration of capital favor diversification rather than the risk that accompanies the growth of the firm's overall activities. In line with our reasoning and consistent with previous research, our main contribution is that the control mechanisms are not neutral with regard to the diversification strategy. The verification of these assumptions in the Saudi context makes it possible to enrich the verification of the positive relationship between governance and the diversification of firms.

ABSTRACTThe paper reports on a study of 28 ethnic Chinese businesses in Brisbane, Adelaide, and Perth, carried out in 2000 and 2001. It focuses on their strategies of vertical, horizontal, and unrelated diversification often combining different activities, products, and markets at the same time. It demonstrates how these practices are socially embedded in their preference for using personal networks.Non‐related diversification, in particular, promotes and is facilitated by using “weak ties” that serve as bridges, leading into new networks (Granovetter, 1973). This can create links to Chinese of different national and dialect origins and to those of other ethnicities. It is suggested that open networks and diversification mutually interact to support each other and may have evolved in tandem from earlier, more closed and niche bound business cultures and practices.

PurposeThe literature on large firms in developing countries proposes a link between types of capabilities and diversification pattern. It is argued that technological/organizational capabilities lead to related diversification, and by using contact/general capabilities firms (mostly in developing countries) are able to diversify into unrelated fields. However, in our case, despite the presence of contact/general capabilities, only related diversification is observed. Limitation of the scope of diversification does not allow them to invest in different lucrative businesses. Most successful firms in developing countries have diversified vastly.Design/methodology/approachTo determine out the reason for this behavior in this case, in‐depth interviews based on open‐ended semi‐structured questionnaire with key 12 decision‐makers were carried out. Each interview took about 90 minutes.FindingsThe case study showed that firms' approach to mission development is connected to firm diversification and capabilities. A mission developed based on a strategic approach leads to the development of technological/organizational capabilities, which make related diversification more likely. However, a mission developed based on a philosophical approach when added to firm contact/general capabilities encourages unrelated diversification.Research limitations/implicationsThe research takes for granted the role of national conditions (e.g. macroeconomic indexes) when it is argueed that the behavior of Khodro is expected to be similar to firms in other developing countries (or formerly developing countries, e.g. South Korea). The work presented here could be tested again in two or more firms in a similar environment.Practical implicationsThe paper's findings should help firms in developing countries to develop their mission statement in a way that allows them to grow faster via unrelated diversification. It also informs them about the limitations of a strategic approach to their mission that hinders them from leveraging their contact and general capabilities.Originality/valuePrevious research has not paid enough attention to managerial issues in firms in developing countries. Firms in developing countries need more context‐specific instructions to succeed.

The need for the adoption of diversification strategy became germane because of challenges which impede organizational performance. This study thus examined the effect of diversification on organizational performance of selected manufacturing industries so in south west Nigeria. Some studies of strategic study have investigated on the effect of diversification on organizational performance in manufacturing industries in Nigeria but have come up with inconclusive findings which create a gap that this study wants to fill. The specific objectives of the study are to examine the effect of related diversification on organizational performance and investigate the effect of unrelated diversification on organizational performance in manufacturing industry. Ex-post facto research design was used for the study. The population consists of employees of 22 manufacturing industries listed in Nigerian Exchange Group between 2011-2020 dealing in Food and Beverages, Breweries, Health care/Pharmaceutical and Conglomerates. The sample size comprises eight manufacturing industries with 750 employee’s selected using stratified sampling technique and selected according to 50% proportion of original sample size. Data were drawn from primary and secondary sources. Descriptive statistics was used to explain the respondent’s characteristics and inferential statistics was used to analyze data collected. Findings revealed that related diversification have significant effect on organizational performance F (4, 745) = 11.988, p < 0.01, R= 0.651, R2 = 0.424, and adjusted R2 = 0.419). Unrelated diversification however have significant but negative effect on organizational performance F (4, 745) = 11.982, p < 0.05, R = -0.466, R2 = 0.217, and adjusted R2 = 0.208). The study concluded that related diversification increase organizational performance while unrelated diversif

Strategic flexibility, sourcing strategy and organisational performance are often a source of contention among firms in manufacturing sector. This paper explores the effects of specific types of strategic flexibility ? related and unrelated product diversification ? that matched with specific types of sourcing strategy ? make and buy. Questionnaires were sent to respondents who were top management officers of firms from four major manufacturing sectors: electrical and electronics, chemicals including petroleum, food and beverages, and fabricated metal. The results confirmed that a specific type of sourcing strategy (make or buy) mediated a specific type of strategic flexibility (related or unrelated product diversification). Specifically, the make strategy partially mediated the relationship between related product diversification strategy and organisational performance, whereas the buy strategy partially mediated the relationship between unrelated product diversification strategy and organisational performance. These findings go along with the theories that support both constructs: industrial organisation theory, transaction cost theory and resource-based view. All these findings would enable practitioners to make better manufacturing and sourcing decisions.

Significant changes in corporate or business strategy imply corresponding changes in capital needs, changes in management competence requirements, and changes in information processing structures. Therefore, such changes in strategy are always of interest to ownership, management, and corporate governance. In practice, the key step is to recognize what kind of changes in corporate and business strategy can take the firm into new territory and to adapt ownership, management, and corporate governance accordingly. As the case descriptions and the analysis in the following pages will show, significant changes in corporate or business strategy have the potential to undermine the long-run viability of the firm. Too often, the broader governance implications of changes in strategy are not recognized or are dealt with inadequately. Instead they should be seen as occasions for reviewing ownership, management, and making major adjustments to how the firm is set up.

Several industrial organization studies, using diversification index measures, examined corporate diversification and economic performance and failed to find any significant relationship between them. Rumelt and other strategy researchers used a semisubjective classification scheme and uncovered a systematic relationship between diversification strategies and performance. This study combines the strengths of the index approach, namely, simplicity, objectivity and replicability, with the essential richness of Rumelt's methodology. Using the Jacquemin‐Berry entropy measure of diversification and the line‐of‐business data, this study finds that firms with predominantly related diversification show significantly better profit growth than firms with predominantly unrelated diversification.

This study examined the overview of how individuals in their respective teams operated and contributed to their organization.This study also identified the salient characteristics of how the respondents made progress as leaders in their respective faculties or departments towards identifying directions for innovative future practice through levels of professional training and length of service in an organization.The significant finding of this study is that it identified the salient criteria of progress making among the Malaysian university staff.Therefore, in general, this study could strengthen the role and responsibilities of Malaysian university staff as leaders.In particular, it will enhance the awareness among university staff pertinent to the leadership role towards their contribution to innovative initiatives.Moreover, the results of this study will be useful to examine the strengths and weaknesses of the university staff when contributing to innovative initiatives.This study employed the survey method purported to explore university staffs' views pertinent to the criteria of making progress as leaders.The instrument used for this study was adopted and adapted from the questionnaire of 'Are We Making Progress as Leaders?' by the Baldrige Criteria for Performance Excellence.Stratified-random sampling was employed to determine the samples representing the population of lecturers in the study, involving 123 lecturers in one of the local universities in Malaysia.The main method employed to analyze the data is descriptive and inferential statistics.This study found that the respondents have the propensity in emphasizing customer focus criteria, followed by leadership.Thus, this indicates that customer focus criteria and leadership are the two areas which were perceived by the respondents to be of the greatest importance in making progress as leaders.Conversely, operational force criteria have the lowest mean.The findings of the study proved that significant difference at the p<.05 level occurred for four criteria namely Strategic Planning, Customer Focus, Result and Innovative category in terms of length of service.Likewise, in terms of levels of professional training, there was also a significant difference at the p<.05 level for Leadership, Customer Focus, Work Focus and Operational Force Criteria.Relatively, the actual difference in mean scores for levels of professional training was higher than mean scores for the length of service.In terms of relationship between the professional training level and the length of service among the university staff towards innovation, findings showed that there was only a significant relationship between the professional training level and the length of service of 4 -6 years among the university staff (Likelihood Ratio= 28.500, df=12, p< 0.5).The rest of the groups based on the length of service showed that there was no significant relationship with the professional training level towards innovation.Moreover, results of the study on directional measures depicted that the relationship for the length of service of 4-6 years with professional training level among the university staff is quite weak with eta=0.07.Leadership criteria were perceived as vital criteria in making progress as leaders.This stems from the fact that good organisation management lies on the shoulders of the key leaders who illuminate the path to be followed by the group members.