The subject of industrial economy describes the growth of businesses. Specialization reflects the desire of the company to limit its development to an area where it controls the bulk of its business or skills. This is the simplest and the most common strategy. This is a ploy adopted by a company that is interested only in one area of strategic focus, and operating the skills in a well-controlled manner without seeking to add new activities. Diversification, in turn, allows the company to emerge from its field of origin and to expand its business portfolio.
[...] II Constraints on the choice between growth through specialization and growth through diversification A The internal and external constraints that influence the choice of strategy Point knowledge: analysis of contingent factors of the strategy Most companies favor a deterministic approach to the strategy. Some focus on the fact that existing structures can influence strategic directions. Other studies, particularly those of Porter emphasize the role of the life cycle of the market, barriers to entry and exit to show that the strategy is a forced choice of opportunity. [...]
[...] Should we take into account the trade, the mission of the organization as far as the financial logic is concerned, to determine the strategic direction? The choice is not between selecting specialization and diversification but rather in finding a certain degree of specialization or diversification to suit the needs. In a situation of unstable environment, the objective of flexibility is of particular interest. The criteria of profitability and flexibility may explain the choice between specialization and diversification. The strategies are influenced by external and internal constraints. I The elements of choice between growth through specialization and growth through diversification Growth by specialization a. [...]
[...] Under the assumptions of Rumelt, companies that grow through diversification (activities that account for 70% of total turnover) should perform better than those who choose conglomerate diversification (where there is little connection between operations) or to those who remain dedicated to a single job dominant activity that is more than 95% of total turnover). Indeed, a company that develops diverse activities cannot rely on economies of scope, nor have greater market power. A specialized company can no longer rely on the realization of synergies. [...]
[...] The flexibility of the company is reduced A specialization strategy comes with its baggage of risks. On the one hand, the company is dependent on cyclical and structural movements that may mark the chosen field of activity. Crises in the sector, a trend reversal, the arrival of substitutes, technological changes are the phenomena which undermine any strategy of specialization. The theory of product life cycle teaches the dangers of the specialization when it arrives in the decline phase. On the other hand, the risk of specialization is linked also to the state of competition. [...]
[...] It is rather meant to enrich the skills of the company and develop new ones to expand into new markets. Strategies that develop skills in business are based on the synergies between knowledge and know-how, and also between technical and commercial activities. They enable groups to innovate and improve their competitive position in the long term. These new concepts of strategy often lead companies to prefer specialization that provides a significant competitive advantage in a trade. Conclusion Given the complexity and uncertainty of the environment, [...]
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