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Corporate Diversification: Options, Strengths, Weaknesses, and Recommendations

Learn about the options, strengths, and weaknesses of corporate diversification strategies and receive recommendations on how to navigate this minefield. Explore the challenges faced by companies in managing a disparate collection of businesses and discover how reorganization can impact value creation.

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Corporate Diversification: Options, Strengths, Weaknesses, and Recommendations

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  1. Diversification is a corporate minefield. In no other area of corporate strategy have so many companies made such disastrous investments. Robert Grant (1991) Contemporary Strategy Analysis Large firm diversification activity has frequently been followedby a process of ignominious sell-offs and retrenchment.” M.E. Porter (1987) Harvard Business Review

  2. 1. What are the options, their strengths and weaknesses, and what would you recommend?

  3. 1. What do you think? 2. How does having such a disparate collection of business make value-adding sense? 3. Does the reorganization change anything? 4. Should it be broken up and if so why – if not why not?

  4. 1. What do you think Mr. Hurd should do now and why?

  5. 1. Why has easyJet been a corporate success? 2. Why have the national flagship airline operators struggled to imitate easyJet’s model? 3. Is the cinema industry a good addition to the easyGroup portfolio? Where would you place it in the BCG matrix? 4. Does the easyGroup parent company add value to its subsidiaries? 5. What would you recommend to Stelios for the future of his group?

  6. 1. Why did Telco move away from centralization toward decentralization? 2. Why did Telco move back towards centralization? 3. Why do firms often get confused about how the centre can best add value and swing from one approach to another? 4. How would go about thinking through how Telco’s centre could best add value in this case? 5. Does the concept of centralized decentralization make sense to you? How would you make it work?

  7. 1. Would you describe Royal Air Maroc as a corporation in its own right, or is it better thought of as a business unit of “Morocco Inc.”? 2. What are the corporate advantages and disadvantages of such a close relationship with the Moroccan government?...

  8. 3. Royal Air Maroc seems to be doing well, so why create Atlas Blue? Why could they not have simply expanded Royal Air Maroc’s own services rather than incurring all the cost associated with establishing a new identity? 4. How can Royal Air Maroc, or the “corporate centre”, best add value to Atlas Blue? 5. Given that Royal Air Maroc sponsor Moroccan cultural events, what should Atlas Blue sponsor?

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