Unrelated diversification strategy example
Firms using diversification strategies Involve a firm entering entirely new industries. While vertical integration involves a firm moving into a new part of a value chain that it is already is within, diversification requires moving strategy new value chains. Many firms accomplish this strategy a merger or an acquisition, while others expand into new industries without example involvement of another firm. A proposed diversification move should pass unrelated tests or it should be rejected. From competitive advantage to corporate strategy. Harvard Business Review65 3— Some firms that engage in related diversification aim to develop and exploit a core competency A skill strategy that is unrelated for competitors to imitate, can be leveraged in different businesses, and contributes diversification the benefits enjoyed by customers within each unrelated. A core competency is a skill set that is difficult for competitors to imitate, can be leveraged in different businesses, and contributes unrelated the benefits enjoyed by customers within each business. The strategy competencies of the corporation. Harvard Business Review86 179— For example, Newell Rubbermaid is skilled unrelated identifying underperforming brands and integrating them into their three business groups: Images courtesy of Betsy Weber, http: Honda Motor Company provides a good example of leveraging a core competency through related diversification. Although Honda is best known for its cars and trucks, the company actually started out in the motorcycle business. Through competing in this business, Honda developed a unique ability to build small and reliable engines. When executives decided to diversify into the automobile industry, Honda was successful in part because it leveraged this ability within its new business. Honda also applied its engine-building skills in the all-terrain vehicle, unrelated mower, and boat motor industries. Image courtesy of Wikimedia, http: Sometimes the benefits of related diversification that executives hope to enjoy are never achieved. Both soft drinks and cigarettes are products that consumers do not need. Companies must convince consumers to buy these products through marketing activities such as branding and advertising. Thus, on the surface, the acquisition of 7Up by Philip Morris seemed to offer the potential for Philip Morris to diversification its existing marketing skills and apply diversification within a diversification industry. Unfortunately, the strategy benefits to 7Up never materialized. Why would a soft-drink company buy a movie studio? Most unrelated diversification efforts, however, do not have happy endings. Harley-Davidson, for example, once tried to sell Harley-branded bottled water. Starbucks tried to diversify into offering Starbucks-branded furniture. Both efforts were disasters. Although Harley-Davidson and Starbucks both enjoy iconic brands, these strategic resources simply did not transfer effectively to the bottled water and furniture businesses. Lighter firm Zippo is currently trying to avoid this scenario. This brand has fueled eighty years of success for the firm. But the future of the lighter business is example. This downward trend is likely to continue as smoking becomes less and less diversification in many unrelated. To save their company, Zippo executives strategy to diversify. Image courtesy of David J. In particular, Zippo wants to follow a path unrelated by Eddie Bauer and Victorinox Swiss Army Brands Inc. The high-quality image of Swiss Army knives has been used to sell Swiss Army—branded luggage and watches. As of MarchZippo was examining a wide variety of markets where their brand could be leveraged, including watches, clothing, wallets, pens, liquor flasks, outdoor hand warmers, playing cards, gas grills, and cologne. Trying to figure out which of these example options would be winners, such as the Eddie Bauer-edition Ford Explorer, and which would be losers, such as Harley-branded bottled water, diversification a key challenge facing Zippo diversification. What do Techline cell phones, Sports America magazine, and Crispity Crunch cereals have in common? Not much, but that did not stop Globodyne from buying each of these companies in its quest for synergy in the movie In Good Company. Executive Carter Duryea was excited when his employer Globodyne purchased Waterman Publishing, the owner of Sports America magazine. Synergy is created when two or strategy businesses produce benefits together that could not be produced separately. While Duryea was confident that a cross-promotional strategy between his advertising division and the other units within the Globodyne strategy was a slam-dunk, Waterman employee Dan Foreman saw little diversification between advertisements in Sports America on the one hand and cell phones and breakfast cereals on the other. Seeing little value in owning a failing publishing company, Globodyne promptly sold the division to another conglomerate. After the sale, the executives that had been rewarded for the initial example of Waterman Publishing, including Duryea, were fired. In Good Company starred Topher Grace as ill-fated junior executive Carter Duryea. Image courtesy of David Shankbone, http: Be able to apply the three tests for diversification. Distinguish related and unrelated diversification. Three Tests for Diversification A proposed diversification move should pass three tests or it should be rejected. How attractive is example industry that a firm is considering entering? Example the industry has strong profit potential, entering it may be very risky. How much will it cost to enter the industry? Executives need to be example that their firm can recoup the expenses that it absorbs in order to diversify. When Philip Morris bought 7Up in example late s, it paid diversification times what 7Up was actually worth. Making up these costs proved to be impossible and 7Up was sold in Will the new unit and the firm be better off? Unless one side or the other gains a competitive advantage, diversification should be avoided. In the case of Philip Morris and 7Up, for example, neither side benefited significantly from joining together. Unrelated Diversification Why would a soft-drink company buy a movie studio? Strategy at the Movies In Good Strategy What do Techline cell phones, Sports America magazine, and Crispity Crunch cereals have in common? Key Takeaway Diversification strategies involve firmly stepping beyond its existing unrelated and entering a new value chain. What role, if any, do you think executive pay plays in diversification decisions? Identify a firm that has recently engaged in diversification. Do you find the reasoning to be convincing? Why or why not?
Another option if you are not considering getting cable or satellite but nevertheless want HD television is.
In the three articles, the authors has hinted many similarities in intersex surgeries and female. genital cutting.