Some firms that engage in related diversification aim to develop and exploit a core competency to become more successful. Many firms accomplish this through a merger or an acquisition, while others expand into new industries without the involvement of another firm.
While Duryea was confident that a cross-promotional strategy between his advertising division and the other units within the Globodyne universe was a slam-dunk, Waterman employee Dan Foreman saw little congruence between advertisements in Sports America on the one Harley davidson related unrelated diversification and cell phones and breakfast cereals on the other.
But the future of the lighter business is bleak.
Distinguish related and unrelated diversification. The high-quality image of Swiss Army knives has been used to sell Swiss Army—branded luggage and watches. Most unrelated diversification efforts, however, do not have happy endings. Below we illustrate some of the different groups in their very diversified portfolio of firms.
Explain the concept of diversification. The core competencies of the corporation. Unless the industry has strong profit potential, entering it may be very risky. Some firms that engage in related diversification aim to develop and exploit a core competency A skill set that is difficult for competitors to imitate, can be leveraged in different businesses, and contributes to the benefits enjoyed by customers within each business.
They maintain capital strength at exceptionally high levels, which gives them an advantage even a cave man could understand. When executives decided to diversify into the automobile industry, Honda was successful in part because it leveraged this ability within its new business.
Shareholders were all on board for the purchase of the Burlington Northern Santa Fe Corporation in Honda Motor Company provides a good example of leveraging a core competency through related diversification.
Making up these costs proved to be impossible and 7Up was sold in Starbucks tried to diversify into offering Starbucks-branded furniture. Key Takeaway Diversification strategies involve firmly stepping beyond its existing industries and entering a new value chain. For example, Newell Rubbermaid is skilled at identifying underperforming brands and integrating them into their three business groups: This is a derivative of Mastering Strategic Management by a publisher who has requested that they and the original author not receive attribution, which was originally released and is used under CC BY-NC-SA.
Sometimes the benefits of related diversification that executives hope to enjoy are never achieved. Rather than trying to develop synergy across businesses, they seek greater financial stability for their firms by owning an array of companies.
Through competing in this business, Honda developed a unique ability to build small and reliable engines. But the future of the lighter business is bleak.
Honda also applied its engine-building skills in the all-terrain vehicle, lawn mower, and boat motor industries. Synergy is created when two or more businesses produce benefits together that could not be produced separately.
Thus, on the surface, the acquisition of 7Up by Philip Morris seemed to offer the potential for Philip Morris to take its existing marketing skills and apply them within a new industry.
Do you find the reasoning to be convincing? What will come to mind when somebody says Virgin to us in ? For example, Newell Rubbermaid is skilled at identifying underperforming brands and integrating them into their three business groups: Will the new unit and the firm be better off?
Looking beyond the risk of failure, I would also argue that unrelated diversification creates further risks in terms of losing brand strength, by blurring the delivery of a single strong message. After the sale, the executives that had been rewarded for the initial purchase of Waterman Publishing, including Duryea, were fired.
Executives need to be sure that their firm can recoup the expenses that it absorbs in order to diversify.Strategy Recommendation Based on the research we conducted regarding Harley Davidson Inc.
we recommend the related diversification, market penetration, and product development strategy. 1. Related Diversification Related diversification is a process that takes place when a business expands its activities into product lines that are similar to. Distinguish related and unrelated diversification.
Firms using diversification strategies enter 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 into new value chains. do not have happy endings. Harley-Davidson, for. RECOMMENDATION Expand European and Asian market.
Increase the sales of Buell sport bike and Harley-Davidson to younger customers and females. Horizontal diversification: acquires or develops new products that could appeal to its current customer groups even though those new products may be technologically unrelated to the existing product lines /5(35).
Transcript of Strategy Analysis of Automotive Firms (Harley Davidson Inc. and Ford Inc.) Strategy Analysis of Automotive Firms Harley-Davidson Inc. & Ford Inc. Harley Davidson Inc.
1. About Harley Davidson Company Diversification Strategies RELATED UNRELATED Related Diversification. Harley-Davidson used Myerson game theory to gain a competitive edge over its Japanese competitors. Different Strategy Development At Harley Davidson Business Essay. Print Reference this. The diversity of their products is considered in terms of its related and unrelated diversification.
However, performance at the business level of the. - Ex: Harley-Davidson 3) Related Diversification: .Download