Purpose
This exercise focuses on how risky various alternative strategies are for organizations to pursue. Different degrees of risk are based largely on varying degrees of externality, defined as movement away from present business into new markets and products. In general, the greater the degree of externality, the greater the probability of loss resulting from unexpected events. High-risk strategies generally are less attractive than low-risk strategies.
Instructions
Step 1 On a separate sheet of paper, number vertically from 1 to 10. Think of 1 as “most risky,” 2 as “next most risky,” and so forth to 10, “least risky.”
Step 2 Write the following strategies beside the appropriate number to indicate how risky you believe the strategy is to pursue and WHY
horizontal integration
related diversification
liquidation
forward integration
backward integration
product development
market development
market penetration
retrenchment
unrelated diversification.