In Corporate Strategy, Collis and Montgomery explain there are two kinds of diversification—linked and constrained. Companies using linked diversification enter new businesses when it relates in some way to another business they are already in (it is linked to it), but does not necessarily have any connection to their other businesses. If they are using constrained diversification, however, they only enter a new business if it is based on their core resources or competencies. Companies based on linked diversification have little coherence to their overall corporate strategy, while companies using constrained diversification tend to be more focused. Constrained diversification allows companies to maximize the effect of their resources because they are shared (100).
Apple uses constrained diversification. Apple is, inherently, a personal computer company (hardware and software), and their businesses utilize their competencies in developing hardware and software. The Macintosh, iPad, iPhone, iPod and AppleTV are all computers, which allows Apple to share resources between businesses. For example, the Macintosh, iPad, iPhone and AppleTV all run OS X, Apple’s operating system. This creates economies of scope, which, Collis and Montgomery point out, create cost savings for the company because their resources are shared across multiple businesses (72).
Rather than just have related businesses, though, each business is a focused platform with no extraneous products or product types. The Macintosh, for example, consists of two kinds—desktop and notebook. These separate product lines each share resources and complement each other. The iMac and MacBook Pro are both primarily constructed from aluminum and glass, so not only do they share the same materials (which reduces costs), but they resemble each other, creating unity between product lines.
Each platform, too, complements the other. Apple’s Macintosh computers sync their media and personal...
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