Diversification Strategies
BUS 508 | Diversification Strategies | Dr. Marilyn Caroll | | Kayla Lewis | 5/6/2012 |
Diversification Strategies
In today’s global markets companies are faced with tough decisions, one of the toughest decisions a corporation faces is whether or not they should diversify their business. Diversification simply means to mix a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio (Silvia M.Chan-Olmsted, 2007). Firms that have success strive to transfer their winning business know- how to new activities. To these firms, diversification means looking at new industries as exciting opportunities. The decision to diversify or not is one that is made on the highest level and is initiated as a corporate strategy. Moving forward with diversifying can mean a company becoming lost and ridden with debt. Some corporations such as General Electric (GE) have experienced success while others such as Time Warner have experienced less success. This paper will compare and contrast Time Warner and GE in terms of size, global presence, financials and whether or not their diversification strategy was successful or unsuccessful.
To begin, the Warner Brothers established what is known today, after many mergers and acquisitions as Time Warner; the company history can be tracked back to 1922. Today the company is the world’s third largest media conglomerate and is publicly traded on the NY stock exchange. It’s headquartered in New York City and its portfolio includes interactive services, cable systems, filmed entertainment, television networks and publishing. The company is classified as being in the diversified entertainment industry; an industry that’s performance is dependent upon the health of the economy, is highly competitive and very volatile. The company
Diversification Strategies
In today’s global markets companies are faced with tough decisions, one of the toughest decisions a corporation faces is whether or not they should diversify their business. Diversification simply means to mix a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio (Silvia M.Chan-Olmsted, 2007). Firms that have success strive to transfer their winning business know- how to new activities. To these firms, diversification means looking at new industries as exciting opportunities. The decision to diversify or not is one that is made on the highest level and is initiated as a corporate strategy. Moving forward with diversifying can mean a company becoming lost and ridden with debt. Some corporations such as General Electric (GE) have experienced success while others such as Time Warner have experienced less success. This paper will compare and contrast Time Warner and GE in terms of size, global presence, financials and whether or not their diversification strategy was successful or unsuccessful.
To begin, the Warner Brothers established what is known today, after many mergers and acquisitions as Time Warner; the company history can be tracked back to 1922. Today the company is the world’s third largest media conglomerate and is publicly traded on the NY stock exchange. It’s headquartered in New York City and its portfolio includes interactive services, cable systems, filmed entertainment, television networks and publishing. The company is classified as being in the diversified entertainment industry; an industry that’s performance is dependent upon the health of the economy, is highly competitive and very volatile. The company
References: Arthur Anderson, J. D. (2007, March 15). Time Warner; The Strategic Plan Report. Retrieved from Drexel.edu: http://www.drexel.edu Barron, Z. D. (2011, March 06). General Electric: Deep Analysis of Company Strategy. Retrieved from Wall Street Cheat Sheet: http://www.wallstreetcheatsheet.com David Allen, A. G. (2007, December 20). Diversification Strategy. Retrieved from Open Multimedia: http://www.openmedia.ie.edu Silvia M.Chan-Olmsted, B.-H. C. (2007, June 04). Diversification Strategies of Media Conglomerates: Examining its Patterns and Determinants. Retrieved from journal of Media Economics: http://www.asc.upenn.edu