RELATIONSHIP BETWEEN DIVERSIFICATION AND DIVISIONALIZATION PROCESSES IN THE CONTEXT OF ENTERPRISE RENEWAL

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The growth of enterprises according to the scheme of concentric and vertical diversification can result in unique competitive advantages in the process of development. However, in this case, diversification does not insure the company against industry-wide crises. It must be recognized that production diversification has a number of disadvantages in unrelated industries. Without experience and poorly oriented in the situation of a new industry, the company can easily lose its position on the market of goods or services. Opening a small business in a new industry, the company gains experience and develops connections, experiencing small losses, receiving small profits. In order to minimize the risks and losses of companies that are actively diversifying their activities, the article examines the relationship between diversification and divisionalization in the case of transformational changes in the development process in accordance with the existing type of external environment of the organization. Considering the fact that today there is no clear definition of the concept of diversification, the article considers the scientific problem of defining this concept in the context of obtaining its further development. The article defines that with increasing dynamism and complexity of the external environment, companies have a need to reduce risks and the need for innovations (technological, management, marketing, etc.) to function in the existing external environment. Innovation usually requires the creation of new divisions, which is a process of sectorization. Diversification of activity is not only a reaction to the carried out process of divisionalization, but also the original reason, caused by the need to reduce activity risks and expand the economic activity of the organization into new areas of activity. The article concludes that diversification and divisionalization are interrelated processes that exist simultaneously and contribute to the renewal of the enterprise, if the transformation process is carried out in a timely manner and in accordance with the existing type of external environment of the organization.