Pick a Middle East (preferably KSA) company whose strategy includes or included diversification. Explore its motives, competitive advantage, and strategic planning based on the following topics (Growth, risk reduction, value creation: Porter’s Essential Tests) . Answer the following questions as per your own understanding.
1. Find out and discuss the primary reasons that prompted the company to diversify. Be specific in your discussion of the same with suitable examples (if possible).
2. What mode of diversification did the selected company adopt? How is it related to its resources and capabilities?
3. Discuss the pros and cons of diversification for the company as well as the industry with suitable examples.
4. For diversification to create shareholder value, it must meet three tests: The Attractiveness Test, The Cost of Entry Test, and The Better-Off Test. Apply these tests to the selected company and discuss.