Diversification Strategies

Topics: Innovation, Marketing, Gatorade Pages: 5 (2097 words) Published: February 22, 2012
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 of software and services is part of the company’s $3.5 billion industrial business which also makes tapes, sand paper, and adhesive. From software to sandpaper may seem extreme but other companies are doing it as well, such as FedEx acquiring Kinko’s and Boeing getting into the communication area. High Jump Software application sales have increased by 30% and are on track to hit $40 million in sales since the acquisition. With 3M as the packaging tool they can and will succeed in this industry. They have a strong mark in this area and an unsurpassed knowledge in this industry. 3M is a diversified technology company serving customers and communities with innovative products and services. Each of their six businesses has earned leading global market positions. Their commitment is to capture the needs of customers and communities which promotes the details of our creativity and enables them to translate these needs into more than 50,000 innovative solutions touching virtually every aspect of modern life. The world of 3M is truly borderless .Their Consumer and Office division saves time and increases productivity for consumers and office workers around the world with innovative products that keep homes cleaner, buildings well-maintained and office work more efficient. They bring clarity to people’s lives with display enhancement films, reflective materials, eye-catching graphics and more. Long-term reliable sources of electrical power, high-performance electronic devices, and speedy and dependable telecommunications networks bring people together from all over the globe using innovations from the Electro and Communication division. Doctors, nurses, and dentists deliver more affordable patient care thanks to the achievements of their Health Care division. They successfully compete in multiple market segments, including medical and surgical products, dental and orthodontic products, health information systems, and personal care products. Getting goods to the market...
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