SUCCESS IN DIVERSIFICATION - BUILDING ON CORE COMPETENCES

This paper presents the findings of research into the relationship bet ween operational and strategic 'relatedness' and the success or failur e of 26 diversification moves undertaken by seven large French industr ial companies. No direct relationship was found between operational re latedness and success. But the ability to exploit or strengthen compet itive advantage through operational relatedness is linked with the suc cess or failure of diversifications (conditional relationship). Manage rial relatedness also appeared to be a condition of success. These res ults contribute to a better understanding of the importance of 'relate dness' in diversifications. The implications for practitioners should be useful considering that the rate of failure of these strategies is still high. The research makes it possible to develop a model of the d iversification process.