Ansoff’s own criticism of this approach is that it can tend to be ‘paralysis by analysis’ where strategic plans are made and remain unimplemented, and profits and growth continue to stagnate.
Firms, which follow a conglomerate strategy, may improve the firm’s position but if this strategy is pursued into growth fields the earnings of the stockholders is frequently diluted. In the absence of synergy, the combined operating performance of a conglomerate firm will in general be no better than it would have been if the divisions operated as independent firms – the conglomerate firm will therefore have no operating competitive advantage. Under abnormal conditions e.g. a recession, conglomerate firms have less staying power than concentric ones and will suffer sharper reversals.