MARKETING DIVERSIFICATION OPPORTUNITIES
 

 

 

 

 

 

 

 

 

 

 

 

If these strengths are properly analyzed with a view to seeking diversification opportuni- ties, it appears that the distiller has unique abilities for successfully entering the business of selling building products, such as wood flooring or siding and compo- sition board. The distiller ’s experience in commodity trading can be transferred to trading in lumber; its experience in dealing with political groups can be used to gain building code acceptances; and its experience in marketing can apply to wholesalers (e.g., hardware stores and do-it-yourself centers) of building products. The case of XYZ Corporation, on the other hand, illustrates how a company can get into trouble if it does not carefully consider its strengths and weaknesses. XYZ was a Northfield, Illinois, company with a penchant for diversifying into businesses that were in vogue in the stock market. Until it was reorganized as the Lori Corporation in 1985, it had been in the following businesses: office copying machines, mobile homes, jewelry, speedboats and cabin cruisers, computers, video recording systems, and small buses. Despite entry into some glamorous fields, XYZ did not share the growth and profits that other companies in some of these fields achieved. This is because XYZ entered new and diverse businesses without relating its moves to its basic skills and competencies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For example, despite the fact that it was the first company to develop a photocopy process, developing its process even before Xerox, its total market share for all types of copier machines and supplies in 1984 was well under 3 percent. XYZ Corporation could not keep pace with technological improvements nor with service on installed machines, an essential competency in the copier business. In addition, it Measuring Strengths and Weaknesses Strategic Capabilities and Direction overextended itself so much so that managerial controls were rendered inadequate. The company finally got out of all its trendy businesses and was reorganized in 1985 to design, manufacture, and distribute costume jewelry, fashion jewelry, and fashion accessories. Beginning in 1990, the company started making some money for its owners.The strengths and weaknesses of a business can be measured at different levels in the organization: corporate, SBU, and product/market level. The thrust of this chapter is on the measurement of strengths and weaknesses at the SBU level. However, as the strengths and weaknesses of the SBU are a composite of the strengths and weaknesses of different products/markets, the major portion of the discussion will be devoted to the measurement of the marketing strengths and weaknesses of a product/market.