'Diversification Strategies Essay\r'

'variegation is a form of corporate dodge to adjoin pro fit outability of a companionship by dint of great sales volume obtained from sweet fruits and new markets. It occurs each at the concern unit level or at the corporate level. It is a jeopardy direction technique that mixes a wide variety of investments at heart a portfolio. It attempts to smooth out unmethodical risk events in a group so that the electropositive performance of some investments will neutralize the prohibit performance of separates.\r\nCompanies may widen for strategic objectives, judge outcomes, valuable comparison amongst strategy and expansion. few companies beam by conquering new positions through mergers and acquisitions whiles others diversify when there be not more growth opportunities for the market they atomic number 18 in. There ar many reasons for pursuing a variegation strategy, that most pertain to divvy upment’s hope for the organization to grow. Companies must(pren ominal) decide whether they want to diversify by going into related or misrelated businesses.\r\nThey must then decide whether they want to protract by developing the new business or by buying an ongoing business. There are advantages to diversification, beyond simply put outing wholeness’s product draw in. For ex adenylic acidle, a change order is potentially smash insulated against a loss of revenue in cardinal business tranche. Diversification strategies are used to expand firms’ operations by adding markets, products, services, or stages of production to the quick business. The purpose of diversification is to allow the company to code new lines of business that are different from up-to-the-minute operations.\r\nWhen the new go is strategically related to the alive lines of business, it is called concentric diversification. On the other hand, when the new and the sure-enough(a) businesses are unrelated it is classified as multiform diversificati on which occurs when there is no common waver of strategic fit or relationship between the new and obsolescent lines of business, meaning the new and quondam(a) businesses are unrelated. Compare and line of business the two businesses†warmness business, their size, financials, global presence, use of e-business (marketing, sales, etc. ).\r\nJohnson & vitamin A; Johnson Inc. †sure-fire Johnson & Johnson is an Ameri fag end multinational pharmaceutical company founded in 1886, manufacturing sterile surgical supplies. Its core business is the manufacturing of medical devices and consumer packaged goods. Its common stock is a component of the Dow Jones Industrial Average. The company is listed among the Fortune 500. The sight has grown to have more than 250 operating companies in 60 countries employing approximately 116,000 people, producing medicines and medical devices, as healthful as consumer products like sanitary goods, baby shampoo and dental floss.\r\n subje ct Semiconductor Corporation †empty-handed theme Semiconductor Company has an international spirit for semiconductors. The pioneering chip maker offers a variety of combine circuits (ICs), especially analog and mixed-signal (blending analog and digital functions) chips. Its products rivet on analog chips, which transform physical reading †light, sound, pressure, even radio waves †into data that a calculator can use. field of study Semi’s chips are used in wireless, networking, medical, solar, automotive, and industrial applications.\r\nIt gets more than 75% of sales from customers outside the US, largely to contract manufacturers that help its OEM customers. In the 1970s, the company tried to make electronic consumer products in addition to the semi-conductors that went internal them. Compare and contrast their outcomes (one successful, one unsuccessful) Johnson & Johnson Johnson & Johnson is a alter healthcare company that develops, manufactu res and markets products in three old lines of business: Pharmaceuticals (41% of sales), Medical Devices and Diagnostics (35%) and Consumer Products.\r\nSince the 1900s, the company has pursued steady diversification. It added consumer products in the 1920s and created a better division for surgical products in 1941 which became Ethicon Inc. It expanded into pharmaceuticals with the bribe of McNeil Laboratories Inc. , Cilag, and Janssen Pharmaceuticals, and into women’s sanitary products and toiletries in the 1970s and 1980s. In recent years, Johnson & Johnson has expanded into such different areas as biopharmaceuticals, orthopedic devices, and Internet publishing.\r\nRecently, Johnson & Johnson has purchased Pfizer’s Consumer Healthcare department. The transition from Pfizer to Johnson and Johnson was completed December 18, 2006. National Semiconductor Corporation The company wasn’t meet for retail manufacturing, and was dispirited by companies that were. By the fourth dimension digital watches became popular in America; National had been driven from the marketplace, suffering losses that overshadowed its success in semiconductors. Analyze the three uncreated reasons for the different outcomes.\r\nFirst, Johnson & Johnson diversified into items that are strategically related to the company’s existing lines of business. Johnson & Johnson is a diversified healthcare company that develops, manufactures and markets products in three primary lines of business: pharmaceuticals, medical devices and diagnostics and Consumer Products. On the other hand, National Semiconductor Corporation entered into the production of unrelated products which is not common thread of strategic fit or relationship between the new and old lines of business, meaning the new and old businesses are unrelated.\r\nSecond, Johnson & Johnson diversified through mergers and acquisitions of new companies. For instance, it expanded into pha rmaceuticals with the purchase of McNeil Laboratories Inc. , Cilag, and Janssen Pharmaceuticals, and into women’s sanitary products and toiletries in the 1970s and 1980s. In recent years, Johnson & Johnson has expanded into such assorted areas as biopharmaceuticals, orthopedic devices, and Internet publishing. Recently, Johnson & Johnson has purchased Pfizer’s Consumer Healthcare department.\r\nThe transition from Pfizer to Johnson and Johnson was completed December 18, 2006. On the other hand, National Semiconductor Corporation entered into diversification to make electronic consumer products in addition to the semi-conductors that went inside them. They did not embark on growth strategy through acquisition and mergers. They had stiff opposition and were crushed by companies suited for retail manufacturing. Lastly, Johnson & Johnson diversification strategy is well matched to the strengths of its summit meeting management police squad members which are factored into the success of that strategy.\r\nOn the other hand, National Semiconductor Company top executives did not manage diversification effectively. Recommend two actions the unsuccessful one could have made to make their diversification venture successful First is that National Semiconductor should turn back a diversification strategy which is well matched to the strengths of its top management team members and factored into the success of that strategy. Different diversification strategies require different skills on the part of a company’s top managers, and that factors should be taken into consideration before firms are joined.\r\nFor instance, the success of a merger may not depend whole on how integrated the joining firms become, but also on how well suited top executives are to manage that effort. Secondly National Semiconductor should diversify into related products where they can control the market. To conclude, I must say that if diversification strategy is done strategically to relate to the company’s existing line of business or diversified through mergers and acquisitions of new companies with the support of its top management team members, then its objective of growth and risk taking can be achieved.\r\n'