Diversification Strategies

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Diversification Strategies
Bus508
09/15/2010

1. Compare and contrast the two businesses-core business, their size, financials, global presence, use of e business (marketing, sales etc) The first business I examined was NetFlix. Netflix is in the midst of a company downturn and must make drastic changes to turn the company back around. Recently the company decided to increase the cost of their monthly services from $10 to $16. This over time caused a decline of 805,000 customers domestically. The company’s stock has decreased from $305 a share July 13 to a now $80 with investor belief in the company’s growth shattered. With a rise in content acquisition costs and steep global expansion costs the company is facing a challenging time. Although profit is growing in Canada and Latin America it is early in the venture and growth is slow. The company decided to introduce the product to the UK and Ireland soon after and company losses doubled to a staggering $23 million. After a couple rough years coffee giant, Starbucks is back with profits on the increase. After suffering losses the company decided to revamp. They began to highlight access to Wi-Fi, localized shops and employee training. These changes helped because profit began to pick up again encouraging the company to go international. They have begun their global expansion beginning with China. Not only did the product sell in China but the company will also grow the company’s coffee bean. After a successful transition to China they have now recently began expanding to India. Starbucks signed a non-binding agreement with the country’s biggest trade coffee grower, Tata Coffe Ltd. In preparation for their international push the company has designed a wordless logo. The new logo is meant to incorporate all cultures by representing the company using only a logo, such as Nike does. This month the company plans to open another 400 channels of business outside the United States. 1. Compare and contrast...
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