Diversification trough acquisition for Musky Inc

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Executive Summary This report is intended to evaluate the proposed diversification strategy being adopted by Musky Corp by the acquisition of Russels Inc. The report outlines some strategic factors for pursuing the acquisition that may help in the assessment of the value of the acquisition. When presented with an opportunity to diversify one shall view and focus against certain criteria and consider determined factors such as: Is the idea consistent with our mission statement? Will it dilute our current efforts? How will it affect our operations? One of the factors that can be taken into consideration is the financial analyses of both firms. However this report will only focus on other strategic impact factors such as: 1. Market impact 2. Technology impact 3. Human resource impact 4. Distribution impact 5. Supplier market impact Introduction Diversification strategies are used to expand firms' operations by adding markets, products, services, or stages of production to the existing business. The purpose of diversification is to allow the company to enter lines of business that are different from current operations. There are three major diversification strategies: concentric diversification (related diversification), where the new business produces products that are technically similar to the company's current product but that appeal to a new consumer group; horizontal diversification (unrelated diversification), where the new business produces products that are totally unrelated to the company's current product but that appeal to the same consumer group; conglomerate diversification, where the new business produces products that are totally unrelated to the company's current product and that appeal to an entirely new consumer group. Most companies first consider diversification when they are generating financial
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