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Diversification Strategies of Multi-national and Domestic Companies in India: A Comparative Evaluation in the Dynamic Environment

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  • Aparna Bhatia
  • Anu Thakur

Abstract

The aim of this article is to analyze and compare the nature, extent and pattern of diversification of domestic and multi-national companies (MNCs). A total of 536 companies from BS-1000 (March, 2012) form the sample of the study. The diversification move has been studied over a period of 10 years from 2001 to 2011. Firms are classified into four categories on the basis of Jacquemin–Berry entropy-index measure (1979) as Very Low Diversified (VLD), Related Diversified (RD), Unrelated Diversified (UD) and Very High Diversified (VHD). In order to check the difference in the extent of diversification, chi-square statistic has been employed. The article identifies that both MNCs and domestic companies are following diversification strategy, although the extent of diversification is higher in the case of MNCs than their domestic counterparts. ‘Related diversification’ is the most preferred strategy for both the groups. Further, both the groups follow an irregular pattern of diversification, although Indian companies prefer faster and forward movement, while MNCs are comparatively sluggish with their moves.

Suggested Citation

  • Aparna Bhatia & Anu Thakur, 2016. "Diversification Strategies of Multi-national and Domestic Companies in India: A Comparative Evaluation in the Dynamic Environment," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 41(3), pages 199-215, August.
    • Handle: RePEc:sae:manlab:v:41:y:2016:i:3:p:199-215
    DOI: 10.1177/0258042X16666578
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