1. If you and your BSG team decided to explore the possibility of diversification beyond the athletic shoe market, what factors would you consider to be positive factors in selecting a diversification target and why; i. e. what positive elements would you be looking for in making your decision? 2. What factors would discourage you from pursuing a diversification strategy with another firm and why?

provided in the explanation section

Explanation:

The process of diversification has to do with connecting to new business opportunity with the existing business. This business startegy helps the company to enter a new area of the market in which it is not currently working. The risk associated with it can or may not provide extraordinary benefits.

In these cases, there are positive factors that encourage diversification-

Other companies will handle the losses in the current company.

Unpleasant surprises can be offset by market diversification.

The resources used under these can be used in sports shoe styling in game simulation companies such as background designers, creative team and so on.

The customer base would be more like that, thereby reducing the attempt of the company to shape a whole new customer base.

If the gaming business starts to decline at any time, all its resources can be used in this new business.

There are always, however, factors which prevent such diversifications.

This can restrict business growth opportunities in the gaming sector as new companies can get investment that is needed to be more competitive.

More new skilled employees, equipment and resources will be needed as the production requires a whole new set of know-how and equipment.

A poorly managed diversification will cause existing businesses to suffer.

As this is a broad horizontal diversification, they can not respond with the same speed to market changes.

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