Question

How is profit generally achieved with a related diversification strategy? How is profit generally achieved with an unrelated diversification strategy? Why do both often fail?

just need to know why do both often fail

Answer 1

Both related and unrelated diversification strategies fail because the analysis of these diversification strategies fails to capture certain scenarios and under estimates or over estimates them. It under estimates cultural integration of two companies, employee attrition and layoffs rate, change management, promotions and recruitment of employees, handling employees, training and skill development etc. It also over estimates the benefits that both the organizations will gain after synergy. Sometimes the revenue stream of the organization is over estimated and in real scenario, it is not possible to make such revenue which is realised at a later stage.