Corporate Strategy: Diversification and the Multi-Business Company Question As evidenced in the railroad business, most organizations that do not diversify their line of production, are always less competitive in the market. Obviously, it is hard to sustain market demand by relying on a single line of production. For instance, Fujifilm faced out Kodak Company in the photography business due to their rigidity to diversify into other products during the revolution of digital technology. Therefore, such business faces high chances of success because of sustainability during harsh conditions while embracing diversification towards its competitive edge.
Some of the viable expansion opportunities in relation to Nike Company may include printing and medical care. Printing business can be transformed from the production of paperwork to image or graphics design, which can be used in promotion of Nike products globally. Secondly, medical care Service Company has high potential of diversifying production of medical technological products that are as well important to the protection and care of the participants who use Nike products. Question 2 Nike Company’s current strategy aims at improving its global competitiveness while ensuring that it stabilizes new market opportunities.
In order to sustain its image as one of the leading footwear organizations from the United States, Nike has succeeded to revolutionize its trading trend by redefining its current strategies of fit, which include the following; Market discovery strategy: In order to prevent other footwear companies from dominating the market, Nike has ventured into selling of affordable products through acquisition of technology of the competitors. Using such knowledge to blend quality product, the organization sells at prices far much less than the competitors such as those in Korea and Japan.
Besides, it does promotion especially by engaging sporting organizations by supplying and blending images on the uniforms of the participants. Consumer behavior: The organization has set up its supply location in trading centers and shopping departments that are prompted by the retailer. Besides, promotion to enhance purchase power of the customers, the product display are accompanied by enticing quality and low cost price that supports the need for purchasing genuine leather product. Competition strategy: The organization has built its reputation by providing quality products that ensure customers are satisfied.
Moreover, the organization has revamp distribution channels that enable its products reach wider market in all major cities across the world, and this helps to maintain consistency in flow of its products in the market. Question 3 Despite diversification in Nike’s products, the organizations engagement to agents such as Converse production center in Indonesia is considered a cash hog. Indonesia receives highest competition in production of footwear from companies such as Adidas. As such, it forces the mother company in the United States to help in funding in order to sustain its existence.
Besides, the company’s operational branch in the United States has been consistently with the cash cow of the smaller branches globally since it controls the intrinsic capital through provision of grants to the subsidiary companies as a way of maintaining competitiveness. Question 4 It is obvious that several companies have benefited from the diversification. However, some organizations have failed to meet their strategic targets due to the issue of over diversification portfolio. For instance, IBM as the original IT company failed to achieve its competitive edge having over diversified its line of product other than the production of hardware’s and software.
IBM’s foundation of failure was characterized by cumbersome trend to maintain its returns and portfolio amongst other things. Over diversification can also cause assets erosion easily due to poor time management especially during shift in business. Conclusively, it leads to additional charges such as ledger fees amongst others things, so adequate precaution should be taken during diversification process.