What reasons might a firm have to diversify (Hence using the diversification strategy)?

1. Exploiting currently superior internal processes / successes 2. Seeking synergies, where activities or assets complement new ones. 3. Exploiting economies of scope, gains through applying the organisation’s existing resources or competences to new markets or services. e.g. Exec Ed using university residences in the summer 4. Stretching corporate management competences across a wider portfolio. (Corporate managerial capabilities applied across a portfolio of businesses is known as “the dominant logic”) 5. Cross-subsidisation. Diversification increases power to cross-subsidise one business from the profits of the others. 6. Increasing market power via “mutual forbearance.” Having the same or wider portfolio of products vs. competitor increases ability to retaliate if they attack 7. When the industry is at a mature phase / no further growth 8. (Bonus item) Facilitates transfer-pricing shenanigans