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Strategic Alternatives Advantages Disadvantages
To achieve their goals, organizations have several options. According to recent research, one such alternative is diversification, which refers to the expansion of a company’s operations into a new product or market area (Nguyen & Hoskisson, 2019). This strategy can be advantageous because it can provide a hedge against market fluctuations and can also increase a company’s competitiveness (Nguyen & Hoskisson, 2019). However, diversification can also be risky because it requires the company to allocate resources and management attention to unfamiliar areas, which can lead to a potential failure (Nguyen & Hoskisson, 2019). Vertical integration can be another strategy. It involves expanding the company’s production chains (Gaur 2020). Vertical integration can prove to be a good strategy, as it allows companies greater control over their supply chains and may also result in cost savings (Gaur 2020). Vertical integration is not always a good idea. It requires lots of resources, and it can increase the complexity of an organization.
