2 On the other hand unrelated diversification takes place when the commonality in markets, distribution channels, production technology or R&D areas differ. 3 Companies pursuing a strategy of unrelated diversification have no intention of leveraging or transferring competencies between business sources. It should decrease the risk by operating in multiple product markets, for obtaining a high Return On Investment (ROI) or for allocat- ing Cash Flow.
4 The reasons for implementing a diversification strategy can be the direct response to market decline of a company, the spreading of risks, because of an increased competitive environ- 1 Cf.Merriden (2001), p.viiii; Hage (2011)