types of synergy in strategic management

types of synergy in strategic management

Strategic Managemnent Journal, Vol. This is known as a single business strategy. Ansoff presented two ways of diversification: market diversification and product diversification. When a large firm has reached a mature life-cycle stage it often has to explore the possibility of how to still grow. Normally, firms that choose related product diversification as a strategy are sharing a common factor such as the raw material, the technology or the know-how needed to produce different products. The interview gave a number of information about Mondi’s life cycle, PDS and challenges especially during the current financial crisis, Mondi is a large and international packaging and paper firm represented in around 35 countries. All work is written to order. In my opinion, it is true that product diversification can be applied both by small and large firms, but I believe that a small firm has more limitations and can not fully develop this strategy in its organization due to limited resources: human, financial and technological. In 2008, it had revenues of 6.3 billion EUR and about 33.400 employees (Mondi, 2009). As the word “related” signals, this diversification strategy is focused on products that have a correlation between each other and are related in some way, especially in their core competences.

Product diversification can be achieved by acquiring an existing firm in the business it wants to enter, starting up a new business subsidiary or entering into joint ventures. Therefore, the investment needed to apply this kind of diversification is greater than by applying a related one. (Tallman, 2003). For a better understanding of these fundamental issues this research will analyze whether related or unrelated product diversification strategy leads large firms to exploit more synergies and creates more value for the firm. Market diversification is a strategy that takes the firm from its existing market to new ones. Investment synergies are very much related to the operational synergies. The means obtaining financial synergy is different from obtaining operational synergies. It might be possible that if the studied firm had been another one, the results of the research question could have been different. These divisions have been: marine division (recreation, military, professional, safety of life at sea, environmental solutions); pool division (pool sector and pool care and water cleaning, heating, pumps, filters); airline equipment division (passenger seats and on-board toilets and sanitation systems); aerosafety systems division (aircraft escape slides, parachute systems, helicopter floats, and flexible fuel tanks); technology division and aircraft system division. Some authors such as Richard Rumel (cited by Lovallo and Mendoca, 2007), Peng (2008) also categorize PDS as: focused, moderately and highly diversified. Therefore the following section is dedicated.

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