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(Horizontal Scope Part 3) - Coggle Diagram

- - - - the value of the diversified firm is less than the sum of its SBU's
      - Taking over and breaking up conglomerates with a diversification discount
      - All businesses were required to become number one or number two in their industry or they would be divested.
    - - Increase their market power
        
        Reducing competiton
      - Synergies
        
        Scale common resources
        
        Develop slack resources in one business
        
        Redeploy these resources to other businesses.
      - Reduce risk or grow the size of firm
      - Pursue profitable opportunities
        
        If these opportunities have no relation with the firm's other businesses
        
        it may be optimal to spin out these new businesses at the earliest chance
  - - - Alliance
      - Long-term contract
        
        Plausible alternative to diversification
      - Licensing
    - - Firm & Markets
      - Advantage & Disadventages
  - - - Does the combination of businesses create value(synergies exist)?
    - - To access the value from the presume synergies, does the same company need to own the businesses?
  - - - Relatedness in diversification implies relatedness in the underlying firm-specific resources
      - Diversification may be better than market alternatives
        
        Synergies arise out of resources that are highly firm-specific and not available in the market.