Strategic Management The Ultimate Justification Discussion Chapter

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That the new operation would not stretch the company's capabilities makes it all the more attractive. 2. Response #1 -- Your case about Citi raises an interesting question about diversification. Companies in the financial services industry generally must diversify within that industry because it is what they know. Is if possible, feasible or even reasonable for a company like Citi to diversify outside of financial services? Would that add value? Could its competencies be applied to another business? I was wondering that about my own company because it is not easy to excel in multiple businesses and yet that is sort of essential to being properly diversified.

Response #2. I don't want to seem fussy but I'm not sure there is evidence of diversification at DHL. They sell to a number of different businesses, I guess there...

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Those companies have retail stores, different types of shipping businesses, customs clearance and more. Now, I would want to pick your brain about that type of diversification. I notice that FedEx thought its Kinko's purchase was a great idea, but it actually demonstrates the theories about having the right types of diversification. In your opinion, do you think that DHL sticks to its core business specifically because it realizes that if it strays too far from that business it will begin to suffer as a result? Is there lack of diversification a smarter strategy than what FedEx in particular has done? I wonder if we flipped the logic of the textbook around we would see that diversification that does not meet the three criteria is simply not good diversification.

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