Diversification Strategies Essay

1410 words - 6 pages

Diversification

BUS 508: Contemporary Business

Dr. Micky Mouse

Assignment2: Diversification Strategies

Submitted by

Minnie Mouse

Research two corporations that have had different outcomes (one successful and one unsuccessful) with their diversification strategies. Compare and contrast each corporation’s diversification strategy and evaluate the reasons for each one’s success or failure in the venture.
Compare and contrast the two businesses—core business, their size, financials, global presence, use of e-business (marketing, sales, etc.).
A great example of companies that utilized completely ...view middle of the document...

This diversification strategy doesn’t always work because companies sometimes overvalue the companies they are acquiring or they allow them to operate as standalone enterprises. Many times, the acquiring firm doesn’t take any steps to improve the performance of the acquired business resulting in failure for both.
Kmart also spent millions of dollars on marketing and built their stores on expensive real estate. Wal-Mart on the other hand built their stores on pastures outside of small towns and invested less of their money on the appearance of their stores and marketing. Wal-Mart also invested their money into the operations aspect of their own stores. While Kmart was investing in acquiring additional companies, Wal-Mart invested their money in information technology and computer systems that linked cash registers to headquarters. This enabled Wal-Mart to have better control over their inventory than Kmart.
Kmart has been unsuccessful in making a profit and has shown uncertainty in its financial ability resulting in an inability to reclaim the market shares lost to Wal-Mart. Kmart’s financial standpoint is unpredictable as they offer their products at higher prices than Wal-Mart. Kmart filed for Chapter 11 bankruptcy in January 2002 and has closed hundreds of stores since then. Kmart is now a wholly owned subsidiary of Sears Holdings Corporation and has been on a fast track of reorganization since they emerged from Chapter 11 Bankruptcy in 2003.
Analyze the three primary reasons for the different outcomes.
Of the two retailers’ diversification strategies, Kmart was the least successful because their focus was more on the specialty stores they acquired than the operations of Kmart. While Wal-Mart was focused on sophisticated methods of distribution, inventory and scanner systems for their stores, Kmart failed in those areas resulting in depleted store inventory and issues with prices being different on the shelves from what was rung up on the cash registers.
The use of technology is another primary reason for the difference in outcomes of the two companies. Wal-Mart’s use of technology to form a centralized information system where all of the stores link to headquarters located in Arkansas by voice data and video, has allowed them to improve inventory controls as well as cut costs. This system tracks the sale of every single item in the store as well as acquisition and product distribution. It also tracks supply and demand data and allows suppliers access to Wal-Mart’s computers. Kmart failed to implement this level of utilization of technology and has come up short.
Wal-Mart was one of the first retailers in the country to require the products sold in their stores to have barcodes. They were the first in the country to install barcode scanners in all of their checkout stands. These systems assisted Wal-Mart in the management of their inventory because they were connected to the centralized computer system....

Other Papers Like Diversification Strategies

Single-Product Strategy Versus Diversification Product Strategy

544 words - 3 pages . In case of concentric diversification a strong brand name can help in leveraging the new products belong to that brand. Diversification strategy can help the company in spreading their customer base. It also helps in enhancing the product portfolio of the company by introducing complimenting products in the market. According to a research conducted by Richard Rumelt, companies who use single-product strategies are least diversified, while

P&G Strategy Essay

1318 words - 6 pages & Gamble in Singapore over the last ten years. The main position in this essay is that diversification can be considered as one of the main strategies used to assist Procter & Gamble build up business competitive advantage. This essay will use theoretical evidence from literature review to analysis the impact of diversification on Procter & Gamble in different time period. The analyses of Procter & Gamble will be carried out in 3

Diversification and Performance

4053 words - 17 pages Diversification. J Int Money Finance, 20, 349–366. doi:10.1016/S0261-5606(01)00004-3. de Wit, I. 2010, "International Diversification Strategies for Direct Real Estate", Journal of Real Estate Finance and Economics, vol. 41, no. 4, pp. 433-457. Webb, R.B. and W. Mclntosh. Real Estate Investment Acquisition Rules For REITs: A Survey. Journal of Real Estate Research, 1986, 1:1, 77-98. Worzala, E. and V. Bajtelsmit. Real Estate Asset

Business Diversifications of Boeing and Ford Motors

1459 words - 6 pages diversification strategies as the following; Concentric diversification, where the new business produces products that are technically similar to the company's current product but that appeal to a new consumer group; Horizontal diversification, where the new business produces products that are totally unrelated to the company's current product but that appeal to the same consumer group; Conglomerate diversification, where the new business produces products

Agricultural Risk

988 words - 4 pages weather so strongly impacts their livelihoods, farm households and their communities are motivated to develop and improve strategies to cope with and manage weather risks. Risk management strategies available to households can be grouped into three categories. 1. Households and communities employ risk management strategies that include crop and labor (on and off farm) diversification, risk-pooling arrangements among peers or family members

De, Liberate and Emerging Strategies

625 words - 3 pages a new activity or activities that are different from the existing one , thus, modifying its field of business). Marketing diversification is a method of diversification which can be classified as specialization in some cases include strategies such as offering complementary products ; searching for new clients with the same needs whose requirements will be met with the same technology and even developing products to replace or

Corporate Stategy Analysis

643 words - 3 pages around, and providing great customer service all at a lower cost. Corporate Diversification Strategies The Coca-Cola Company and VF Corporations are both using the Concentric Diversification strategy to expand and grow the companies to their max potential. Both companies are taking advantage of their strengths and using those skills they incorporate it in to new brands and companies they buy out and make them successful. Concentric Diversity

Swot Apple Inc Music Entetainment

2456 words - 10 pages corporate level strategy to become more diversified is to create additional value. Figure 1: Value Creating Diversification Strategies: Operation and Corporate relatedness The related diversification corporate strategy help the firm create value by sharing activities or transferring competencies between different businesses in the company’s portfolio. Operational relatedness is sharing either primary activities (such as inventory delivery

Nike

529 words - 3 pages Strategic Diversification By Nike This assessment presents the values Nike has developed throughout its functional business areas, how value creation is lacking in some business areas, and how the acquisition of The North Face would create additional value for Nike.Strategic Value Creation of Nike The table below illustrates significant strategies Nike has employed to create value for its customers, the actual value created, and barriers to the

The Walt Disney Company

668 words - 3 pages Disney’s outstanding history of success has been accomplished through a series of strategic business choices involving synergies, brand management, and creativity. Known as the king of entertainment and media, Disney has also been able to remain profitable for so long due to the company’s various strategies used to create value through diversification, expansion, and integration. Throughout Disney’s history, the company was always operated by

Ansoff Matrix

3268 words - 14 pages development, market development and diversification (Ansoff 1957, 1989). The four strategies entailed in the matrix are elaborated below. Ansoff Product-Market Growth Matrix Market penetration Market penetration occurs when a company penetrates a market with its current products. It is important to note that the market penetration strategy begins with the existing customers of the organisation. This strategy is used by companies in order to

Related Essays

Diversification Strategies Essay

2217 words - 9 pages Diversification Strategies Diversification strategies are used to expand firms' operations by adding markets, products, services, or stages of production to the existing business. The purpose of diversification is to allow the company to enter lines of business that are different from current operations. When the new venture is strategically related to the existing lines of business, it is called concentric diversification. Conglomerate

Diversification Strategies Essay

1143 words - 5 pages Diversification Strategies  Kenneth Thomas Strayer University Contemporary Business 508 November 2, 2011 Dr. Dennis Darlark Diversification Strategies Diversification strategies in today’s business world can allow a company to increase its presence and product line to increase shareholder value in an ever changing economy. A well thought out mix of product development and acquisitions through mergers can reap a company many inherent

Assignment 2 Diversification Strategies

3296 words - 14 pages helps it in handling the threats of new entrants, and product substitutes too. Thus this case analysis is a true example of following the best strategies for product innovation and successfully implementing them for profitable growth under the best leadership style which is being depicted by Brabeck in Nestle. 5. RECOMMENDATIONS At corporate level Nestle follows is Diversification Strategy because it is a food and beverages company but through

Diversification Strategies: The Secret Of Southwest Airlines" Success

1302 words - 6 pages Assignment 2: Diversification Strategies “The Secret of Southwest Airlines’ Success” BUS 508, Contemporary Business Determine how Southwest Airlines’ corporate culture differs from other airlines: From the time Herb Kelleher co-founded Southwest Airlines in 1971 his goal was to establish a company that cared about its employees, who would in turn care about and service the needs of their customers with pride. Southwest has created