Diversification strategies on the MNCs Theories and Applications

Regarding previous researches and scientific literature, avoiding diversification could lead to organizational and managerial advantages such as, less ambiguity, focused exclusively on keeping the firm’s strategy and managers could focus on the core business. Nevertheless a single-business strategy has its own risk beside its benefits. Arthur Thompson and Strickland (2991) mentioned that firms, which are targeting the single-business strategy, are putting all firms’ eggs in one industry basket. This paper investigates the relationship between Multinational Corporations (MNCs) and their diversification strategies with special focus on the geographic and the product diversification strategy. Although, the recent empirical research indicates that MNCs could have both a lower debt ratio and a higher agency cost of debt than DCs (Domestic Corporations), it is often discussed that the international diversification should aid MNCs to sustain a higher debt than DCs (Shapiro, 2991; Eiteman et al 2991). This Paper will address the complexity that a firm faces during internationalization or expansion that depends on large part of the cultural differences between newly entered countries and those that have been entered already or even home country.

کلیدواژه ها:

Diversification strategy ، Multinational Corporations ، Corporate Strategies ، Market Entry decisions ، Acquisition ، Internal Start-up ، Joint Venture ، Geographical Diversification ، Product Diversification ، Cultural distance