Diller’s corporate strategy constitutes related businesses offering different services that range from financial services to matchmaking services. His businesses are related on most dimensions even if they provide different services. He is driven by the vision to grow, and since his business offer different services he has to acquire new knowledge and concepts to manage the multiproduct corporation. The strategy reduces costs, and hence a competitive advantage increasing the revenue generated.
Inter Active Corporation (IAC)’s level diversification entails several related business engaging in offering different services ranging from financial to match making services. The IAC level of diversification would improve its flexibility, profits, and a better performance in the capital market. This level of diversification therefore allows Diller’s business overall return on investment to grow providing a better chance to compete in the market.
Diller was driven by the vision to explore opportunities that promised greater profits and growth. His reason for this level of diversification may have been provoked by the spreading of risks as result of market contraction. This is evidenced by the formation of a corporation with related businesses that offer different services. Diller also decided to diversify so since his present business seemed not to deliver additional opportunities for growth after failing to buy Paramount.
Diller’s approach towards the formation of IAC was a value creating diversification to increase the worthiness of his business. He created better value of his services to the customers when he realized that his business were related and joined them into one corporation for sharing of resources. The corporation therefore would ensure that the needs of the customers were continuously catered. If one business made losses, it would depend on the rest hence attractive returns for the corporation, and therefore value creation.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management: Competitiveness and globalization : concepts and cases (p. 186). Australia: Thomson/South-Western.