Diversification Strategies
Diversification Strategies
Let’s explain diversification of a company first; I myself thought it meant something totally different. A diversified company is a company that has multiple unrelated businesses. Those different businesses require separate management teams, have different customers, and produce different products or sell different services. One of the advantages of being a diversified company is that can create a separation from issues of one of the other businesses.
Companies can become diversified by starting a new business on its own or merging with an existing company. Also they could purchase another company that produces a different product or provides a different service. One of the challenges of diversification is the ability to produce a profitable return for shareholders alleviating questions of corporate value through the mergers and or acquisitions.
Some of the most well known diversified companies are 3M, Motorola, GE, and Sara Lee. We will focus on 3M. Almost a century ago 3M introduced and produced sand paper and recently rolled out software that will help companies manage warehouse, shipping yards, and logistics. Two totally different products under the same 3M roof and operating as two separate entities, which is one of the few diversified products 3M offers. The reason for this is that the customers are changing, and to meet there demands, the company is changing also. 3M decided that they can’t afford to succeed at inventing and manufacturing dozens of products use by people and businesses, but they also need to help their businesses better manage the processes and supply chains of which those products move. So to help with this they purchased High Jump Software Inc. High Jump Software Inc. is an established developer of supply chain execution software. They have applications that are used by companies such as Starbuck’s Corp. to manage their products and processes at distribution centers.
3M’s expanding portfolio
Let’s explain diversification of a company first; I myself thought it meant something totally different. A diversified company is a company that has multiple unrelated businesses. Those different businesses require separate management teams, have different customers, and produce different products or sell different services. One of the advantages of being a diversified company is that can create a separation from issues of one of the other businesses.
Companies can become diversified by starting a new business on its own or merging with an existing company. Also they could purchase another company that produces a different product or provides a different service. One of the challenges of diversification is the ability to produce a profitable return for shareholders alleviating questions of corporate value through the mergers and or acquisitions.
Some of the most well known diversified companies are 3M, Motorola, GE, and Sara Lee. We will focus on 3M. Almost a century ago 3M introduced and produced sand paper and recently rolled out software that will help companies manage warehouse, shipping yards, and logistics. Two totally different products under the same 3M roof and operating as two separate entities, which is one of the few diversified products 3M offers. The reason for this is that the customers are changing, and to meet there demands, the company is changing also. 3M decided that they can’t afford to succeed at inventing and manufacturing dozens of products use by people and businesses, but they also need to help their businesses better manage the processes and supply chains of which those products move. So to help with this they purchased High Jump Software Inc. High Jump Software Inc. is an established developer of supply chain execution software. They have applications that are used by companies such as Starbuck’s Corp. to manage their products and processes at distribution centers.
3M’s expanding portfolio
References: Bricker, Jancasz, Majeed, Shivji, and Zilic (2008) Wentz R 2008 Global Innovation Machine: How P&G, GE, Google, IBM, Sony, 3M, Toyota Run Their Global Innovation ManagementWentz, R. (2008). The Global Innovation Machine: How P&G, GE, Google, IBM, Sony, 3M, Toyota Run Their Global Innovation Management. Retrieved January 21, 2012, from http://www.the-innovation-machine.com/?p=86 Francke C 20081120 3M Company Industrial, DiversifiedFrancke, C. (2008, November 20). 3M Company Industrial, Diversified. Retrieved January 21, 2012, from http://www.sustainability-indexes.com/djsi_pdf/djsi_world/CompanyBiographies/Bios04/CBR_3M_Co_04.pdf Funding Universe (n.d.). PepsiCo, Inc. Retrieved January 21, 2012, from http://www.fundinguniverse.com/company-histories/PepsiCo-Inc-Company-History.html Pepsico (n.d.). PepsiCo 's Strong, Diversified Portfolio and Growth Strategy Deliver Solid Second-Quarter Results; Company Reaffirms Full-Year Guidance. Retrieved January 22, 2012, from http://www.pepsico.com/PressRelease/PepsiCos-Strong-Diversified-Portfolio-and-Growth-Strategy-Deliver-Solid-Second-Q07222009.html Shor R Managed Innovation: 3M 's Latest Model for New ProductsShor, R. (n.d.). Managed Innovation: 3M 's Latest Model for New Products. Retrieved January 20, 2012, from http://www.manufacturingnews.com/news/editorials/shor.html Steiner A 200808 Post-It-ManSteiner, A. (2008, August). Post-It-Man. Retrieved January 22, 2012, from http://www.superlawyers.com/minnesota/article/Post-It-Man/12ae3411-7f77-4c8a-b637-4d9c7fde35b6.html Wentz R 2008 Global Innovation Machine: How P&G, GE, Google, IBM, Sony, 3M, Toyota Run Their Global Innovation ManagementWentz, R. (2008). The Global Innovation Machine: How P&G, GE, Google, IBM, Sony, 3M, Toyota Run Their Global Innovation Management. Retrieved January 21, 2012, from http://www.the-innovation-machine.com/?p=86