Leadership and Business Wisdom.

Author:Kazmi, S. Kamal Hayder
Position:Common core of unity in diversification

Byline: S. Kamal Hayder Kazmi

Common Core of Unity

There has to be a "common culture" or at least a "cultural affinity."

Successful diversification by acquisition, like all successful diversification, requires a common core of unity. The two businesses must have in common either markets or technology; through occasionally a comparable production process has also provided sufficient unity of experience and expertise, as well as a common language, to bring companies together. With-out such a core of unity, diversification, especially by acquisition, never works; financial ties alone are insufficient.

One example is a big French company that has been built by acquiring producers of all kinds of luxury goods: champagne and high-fashion designers, very expensive watches and perfumes and handmade shoes. It looks like the...

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