Discussion Questions

$1.$ Diversified firms vary according to their level of diversification and the connections

between and among their businesses. Outline and describe the levels and types of

diversification strategies that firms may engage in$.$

$2.$ A firm uses a corporate$-$level diversification strategy for a variety of reasons. Discuss

the reasons firms choose to diversify their operations.

$3.$ How do firms create value when using a related diversification strategy? Discuss both

types.

$4.$ What is unrelated diversification? What are the two ways to obtain financial

economies when using an unrelated diversification strategy?

$5.$ What are the advantages and disadvantages of diversification?

$6.$ What is value$-$neutral diversification? Discuss the incentives that a firm may have to

diversify.

$7.$ Managerial motives to diversify can exist independent of value$-$neutral reasons $($i$.$e$.,$

incentives and resources$)$ and value$-$creating reasons $($e$.$g$.,$ economies of scope$).$ What

are these motives that might encourage managers to diversify their firm?

$8.$ Research one Jamaican company and explain the level and type of diversification the

firm is involved in$.$