Final answer:
Both related and unrelated diversification strategies can perform well depending on various factors such as the company's resources and ability to execute the strategy effectively.
Step-by-step explanation:
Related and unrelated diversification strategies are both valid approaches, but their performance may depend on various factors.
In a related diversification strategy, a company expands its business operations into new industries that are related to its existing products or services. This strategy allows the company to leverage its existing resources, knowledge, and customer base to enter new markets. If executed well, a related diversification strategy can lead to synergies and cost savings, resulting in better performance.
On the other hand, an unrelated diversification strategy involves entering completely unrelated industries. This strategy is usually adopted to minimize the risk associated with a single industry or market. However, it can be challenging to manage diverse businesses effectively, and the success of this strategy depends on the company's ability to generate profits and achieve economies of scale in each industry.
In summary, the performance of a related or unrelated diversification strategy depends on the specific circumstances of the company, its resources, and its ability to execute and manage the diversification effectively.