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The Discount That Wasn't: Teaching Corporate Scope Through Live Nation

Learning Objectives

The Question Under the Question

The Discount as an Artifact

The Frame and the Economics Underneath

Worked Example: The Live Nation Flywheel, Reasoned Through

Drift Alert: The Misreadings

Misreading one: diversification destroys value, as settled fact

Misreading two: the premium is now the verdict

Expert Depth, Practice, and Extensions

Expert Depth: Build, Borrow, or Buy, and the Endogeneity Blade

Practice: Script the Turns

Go Further

Quiz

1. What did Villalonga's establishment-level data show about the diversification discount?

2. What does the 25% figure count, and why does it matter?

3. According to Rumelt, which diversification type outperforms, making relatedness the live variable?

4. In Teece's (1982) terms, what is being redeployed across Live Nation's segments?

5. After learning the discount was an artifact, why should students not adopt "diversification creates value" as the new verdict?

Course Completion and Surveys

Completion

Critique the Pedagogical Application of Villalonga's Reversal

Evaluate Instructor Readiness to Teach Teece's Redeployment Logic

For decades, the 'diversification discount' was taught as a settled fact in corporate strategy: conglomerates and diversified firms inherently destroy shareholder value. But what if the foundational data was misread.

For decades, the 'diversification discount' was taught as a settled fact in corporate strategy: conglomerates and diversified firms inherently destroy shareholder value. But what if the foundational data was misread? Welcome to 'Rethinking the Diversification Discount: Measurement, Relatedness, and Redeployment.' This comprehensive course is meticulously designed for strategy educators, corporate analysts, and advanced business students who want to unpack the true complexities of corporate scope. Through the engaging lens of the Live Nation case study, we will dismantle the traditional narrative and explore how diversification—when executed with strategic relatedness and precise resource redeployment—can actually drive immense competitive advantage and value. You will dive deep into Villalonga's groundbreaking establishment-level data, Rumelt's foundational theories on relatedness, and Teece's logic of resource redeployment. Furthermore, we will navigate common pedagogical and analytical pitfalls, ensuring you don't simply replace the 'discount' myth with a 'premium' myth, but rather master the nuanced economics underneath. Whether you are teaching the next generation of business leaders in a university setting or analyzing corporate flywheels in the boardroom, this course provides the expert depth, practical scripts, and rigorous frameworks needed to master the endogeneity blade of build, borrow, or buy decisions. Join us to reshape your understanding of corporate diversification, elevate your strategic acumen, and bring cutting-edge insights to your practice.

Rethinking the Diversification Discount: Measurement, Relatedness, and Redeployment

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            <p>For decades, the "diversification discount" stood as a seemingly unassailable pillar of corporate strategy, dictating how scholars and practitioners evaluated corporate scope. However, rigorous re-examination of establishment-level data—most notably through Villalonga's empirical work—has revealed this discount to be largely a measurement artifact rather than an absolute economic reality. This course systematically dismantles the entrenched assumption that diversification inherently destroys value, pivoting the analytical lens toward the mechanics of relatedness and resource redeployment. By anchoring the theoretical discourse in the empirical realities of modern conglomerates, the curriculum challenges case-method instructors and advanced strategy scholars to recalibrate their pedagogical frameworks. The focus shifts from binary assessments of value creation or destruction to a nuanced examination of the underlying economics driving corporate scope, demanding a higher standard of evidence when evaluating multi-business firms.</p>

<p>Through a detailed dissection of the Live Nation flywheel, participants will operationalize David Teece’s logic of resource redeployment and Richard Rumelt’s typologies of relatedness. The modules are explicitly designed to equip strategy educators with the analytical scaffolding required to navigate complex classroom dynamics, specifically addressing common theoretical drift—such as the erroneous leap from debunking the discount to declaring a universal diversification premium. Furthermore, the curriculum delves into advanced methodological considerations, including the "endogeneity blade" and the build-borrow-buy framework, ensuring that doctoral-level students and instructors can rigorously script the turns of their case discussions. Ultimately, this exploration demands a precise critique of how foundational strategy canons are applied, measured, and taught, preparing educators to guide students through the intricate realities of modern corporate strategy.</p>
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