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Service diversification and its effect

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Frame of Image heir peak in 2004, even though there are some exceptions. The declining profitability in manufacturing is not a phenomenon found only in Korea, but also in advanced countries. Manufacturing companies in advanced economies had already experienced this phenomenon in the late 1980s. One way of improving profitability for manufacturing compa-
nies is to expand into services. That is, those companies which pursue sustaining growth tend to seek new r evenue sour ces in services that are closely related with their core products. The effort is a kind of business diversification. The business diversification of a firm is related with the fusion of management strategies as well as with the expansion of the business. Also, it tends to affect the performance of a firm. The past literature on business diversification can by classified into two broad categories; the first one emphasizes the ‘relatedness’ among business units or investment units. This kind of business diversification increases the ability and market competitiveness of a firm.1) The second one is where the unrelated diversification of a firm reduces various risk factors.2) Amit & Wer ner felt(1990)3) demonstrate that
1) Snow & Hrebiniak(1980), Pahalad & Hamel(1990), Robbins & Wiersema(1995). Snow, C.C., Hrebiniak, L.G.(1980), “Strategy, Distinctive Competence, and Organizational Performance,” Administrative Science Quarterly, 25(2), pp. 317-336. Pahalad, C.K., Hamel, G.(1990), “The Core Competence of the Corporation,” Harvar


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Title Service diversification and its effect
Similar Titles
Material Type Reports
Author(English)

Kim, Jin Woong

Publisher

[Seoul]:Korea Institute for Industrial Economics & Trade

Date 2009
Journal Title; Vol./Issue KIET Industrial Economic Review(Cover story):vol. 14(no. 4)
Pages 9
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Industry and Technology < Manufacturing
Holding KIET; KDI School

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