By answering six questions, managers can reduce the gamble in this high-stakes game.
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One of the most challenging decisions a company can confront is whether to diversify: the rewards and risks can be extraordinary. Success stories abound—think of General Electric, Disney, and 3M—but so do stories of such infamous and costly failures as Quaker Oats’ entry into (and exit from) the fruit juice business with Snapple, and RCA’s forays into computers, carpets, and rental cars.
A version of this article appeared in the November–December 1997 issue of Harvard Business Review.
Read more on Mergers and acquisitions or related topics Strategic planning and Risk management
Constantinos C. Markides is a professor of strategic and international management at London Business School.
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Read more on Mergers and acquisitions or related topics Strategic planning and Risk management
