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A Model for Diversification

Author

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  • H. I. Ansoff

    (Director, Diversification Dep't., Lockheed Aircraft Corporation, Burbank, California)

Abstract

During the past few years, many interesting papers have been written on the subject of product-market diversification. A majority of the writers have dealt with either case histories of successful diversification or with qualitative check-off lists to be used in analyzing specific diversification opportunities. A much smaller group of papers has been devoted to formulation of a systematic approach which a company can use to compare alternative diversification decisions. This paper falls in the latter category. As a first step, diversification is defined and distinguished from other company growth alternatives. Typical growth perspectives are described which may motivate a company to diversify. Diversification objectives are established and related to the company's long-range objectives. A two-step evaluation scheme is proposed for selection of the preferred diversification strategy. The first is a qualitative step, which narrows a wide field of diversification opportunities to a selected few which are consistent with the company's diversification objectives and long-range policy. In the second step, a quantitative procedure is outlined for evaluating the relative profit potential of the selected alternatives. Finally, limitations of the present method are discussed.

Suggested Citation

  • H. I. Ansoff, 1958. "A Model for Diversification," Management Science, INFORMS, vol. 4(4), pages 392-414, July.
    • Handle: RePEc:inm:ormnsc:v:4:y:1958:i:4:p:392-414
    DOI: 10.1287/mnsc.4.4.392
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    Cited by:

    1. Bonazzi, Riccardo & Grèzes, Vincent & Barbey, Valérie, 2017. "Service Design Guidelines for New Types of Wellness Tourism," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2017), Dubrovnik, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Dubrovnik, Croatia, 7-9 September 2017, pages 332-339, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    2. Günther, Jutta & Michelsen, Claus & Peglow, François & Titze, Mirko & Fritsch, Michael & Noseleit, F. & Schröter, A., 2008. "Evaluierung der FuE-Projektförderung des Sächsischen Staatsministeriums für Wirtschaft und Arbeit: Endbericht," IWH-Sonderhefte 3/2008, Halle Institute for Economic Research (IWH).
    3. Caren B Scheepers & Camrin Roberts Maher, 2019. "Leadership’s Thinking Process with Contextual Intelligence in Executing Diversification Strategy," Journal of Economics and Behavioral Studies, AMH International, vol. 11(1), pages 73-89.
    4. Brian Chung & Philip Hans Franses & Enrico Pennings, 2024. "Conditions that make ventures thrive: from individual entrepreneur to innovation impact," Small Business Economics, Springer, vol. 62(3), pages 1177-1200, March.
    5. Guerras-Martín, Luis Ángel & Ronda-Pupo, Guillermo Armando & Zúñiga-Vicente, José Ángel & Benito-Osorio, Diana, 2020. "Half a century of research on corporate diversification: A new comprehensive framework," Journal of Business Research, Elsevier, vol. 114(C), pages 124-141.
    6. Zhang, Zongyi & Fan, Zhenjun, 2024. "Oil price uncertainty and corporate diversification: Evidence from Chinese manufacturing firms," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 929-947.
    7. Wang, Qian & Shen, Jianghua & Ngai, Eric W.T., 2023. "Does corporate diversification strategy affect stock price crash risk?," International Journal of Production Economics, Elsevier, vol. 258(C).
    8. Maurizio La Rocca & Tiziana La Rocca & Dionigi Gerace & Ciorstan Smark, 2009. "Effect of diversification on capital structure," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(4), pages 799-826, December.
    9. Koppers, Carina & Klumpp, Matthias, 2010. "Integrated business development," ild Schriftenreihe 7, FOM Hochschule für Oekonomie & Management, Institut für Logistik- & Dienstleistungsmanagement (ild).

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