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Article

Evaluation of the effectiveness of diversification process management in an enterprise

Oleh Hlushko
Abstract

The study aimed to develop and test an integrated approach to assessing the effectiveness of diversification process management. The study used systemic-structural, comparative-analytical and integrated-assessment approaches, which ensured a comprehensive study of the interrelationships between the economic, strategic and managerial aspects of diversification, as well as the construction of an integrated performance index with stages of normalisation, weighting and aggregation of indicators, tested on the cases of 3M Company and General Electric. The study established that the effectiveness of managing diversification processes of an enterprise is determined by economic results, the quality of management procedures and the strategic alignment of business areas. The study determined that the integration of all three approaches provides a comprehensive assessment of the effectiveness of diversification. A methodological approach to the integrated assessment of the effectiveness of enterprise diversification management was developed. A system of three groups of criteria was proposed, which provides a comprehensive reflection of the results of diversification strategies. Based on data normalisation and weighted aggregation of indicators, an integrated management performance index was constructed and tested on the example of 3M Company and General Electric for 2024. The calculations showed that 3M Company demonstrated a higher integrated index of diversification management performance (0.857) compared to General Electric (0.671). Despite a lower Economic Value Added (6.1) compared to General Electric (7.5), the structure of the 3M Company portfolio remains more diversified (lower Herfindahl-Hirschman Index – 0.25 vs. 0.30), indicating greater flexibility and less concentration of business areas. The results obtained can be used to diagnose the effectiveness of diversification strategies in corporate governance, as well as to develop tools for strategic monitoring and optimisation of corporate business portfolios

Keywords

financial performance; strategic alignment; quality of management decisions; integrated index; business portfolio

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Received 09.08.2025, Revised 03.12.2025, Accepted 23.12.2025 Published 29.12.2025

Retrieved from Vol. 12, No. 2, 2025

Suggested citation

Hlushko, O. (2025). Evaluation of the effectiveness of diversification process management in an enterprise. Economics, Entrepreneurship, Management, 12(2), 50-61. https://doi.org/10.56318/eem2025.02.050

https://doi.org/10.56318/eem2025.02.050

Pages 50-61

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