This is a€?Selecting Corporate-Level Strategiesa€?, chapter 8 from the book Strategic Management: Evaluation and Execution (v. This content was accessible as of December 29, 2012, and it was downloaded then by Andy Schmitz in an effort to preserve the availability of this book. PDF copies of this book were generated using Prince, a great tool for making PDFs out of HTML and CSS. For more information on the source of this book, or why it is available for free, please see the project's home page. DonorsChoose.org helps people like you help teachers fund their classroom projects, from art supplies to books to calculators. Although Walt Disney was a visionary, even he would have struggled to imagine such enormous numbers when his company was created. Following a string of legendary films such as Pinocchio (1940), Fantasia (1940), Bambi (1942), and Cinderella (1950), Walt Disney began to diversify his empire.
The Walt Disney Company began a series of acquisitions in 1993 with the purchase of movie studio Miramax Pictures. With annual revenues in excess of $38 billion, The Walt Disney Company was the largest media conglomerate in the world by 2010. Disneya€™s presence in the television industry, including ABC, ESPN, Disney Channel, and ten television stations, accounted for 45 percent of revenues. By mid-2011, questions arose about how Disney was managing one of its most visible subsidiaries. When the reviews of Pixara€™s Cars 2 came out in June, it seemed that Disneya€™s preferences were the driving force behind the movie.
Will John Lassiter, Pixara€™s chief creative officer, be prevented from making more quirky films like Up! When dealing with corporate-level strategy, executives seek answers to a key question: In what industry or industries should our firm compete?
For many firms, concentration strategiesActions that firms use to try to compete successfully only within a single industry. Nike, for example, features famous athletes in print and television ads designed to take market share within the athletic shoes business from Adidas and other rivals. Starbucksa€™ market development strategy has allowed fans to buy its beans in grocery stores.
In 2009, Starbucks introduced VIA, an instant coffee variety that executives hoped would appeal to their customers when they do not have easy access to a Starbucks store or a coffeepot. Product development is a popular strategy in the soft-drink industry, but not all developments pay off. Rather than rely on their own efforts, some firms try to expand their presence in an industry by acquiring or merging with one of their rivals.
Some purchased firms are attractive because they own strategic resources such as valuable brand names.
The combination of UFC and Strikeforce into one company may accelerate the growing popularity of mixed martial arts. Despite the potential benefits of mergers and acquisitions, their financial results often are very disappointing. In the end, between 30 percent and 45 percent of mergers and acquisitions are undone, often at huge losses.Hitt, M. Market penetration, market development, and product development are three methods to grow within an industry.
Suppose the president of your college or university decided to merge with or acquire another school. Given that so many mergers and acquisitions fail, why do you think that executives keep making horizontal integration moves? Can you identify a struggling company that could benefit from market penetration, market development, or product development?
When pursuing a vertical integrationWhen a firm gets involved in new portions of the value chain.
In the late 1800s, Carnegie Steel Company was a pioneer in the use of vertical integration. The risk of not being vertically integrated is illustrated by the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.
The 2010 explosion of the Deepwater Horizon oil rig cost eleven lives and released nearly five million barrels of crude oil into the Gulf of Mexico. A backward vertical integrationA strategy that involves a buyer entering the industry that it purchases goods or services from.
To ensure high quality, Ford relied heavily on backward vertical integration in the early days of the automobile industry.
Although backward vertical integration is usually discussed within the context of manufacturing businesses, such as steelmaking and the auto industry, this strategy is also available to firms such as Disney that compete within the entertainment sector.
A forward vertical integrationA strategy that involves a supplier entering the industry that it supplies inputs to. Forward vertical integration also can be useful for neutralizing the effect of powerful buyers. The massive number of cars purchased by rental car agencies makes forward vertical integration a tempting strategy for automakers. Applea€™s ownership of its own branded stores set the firm apart from computer makers such as Hewlett-Packard, Acer, and Gateway that only distribute their products through retailers like Best Buy and Office Depot. In contrast, Applea€™s stores are popular in part because store employees are experts about Apple products. Some universities have used vertical integration by creating their own publishing companies.
A proposed diversification move should pass three tests or it should be rejected.Porter, M. Related diversificationWhen a firm moves into a new industry that has important similarities with the firma€™s existing industry or industries. Honda Motor Company provides a good example of leveraging a core competency through related diversification. Hondaa€™s related diversification strategy has taken the firm into several businesses, including boat motors.
Sometimes the benefits of related diversification that executives hope to enjoy are never achieved. The durability of Zippoa€™s products is illustrated by this lighter, which still works despite being made in 1968. In particular, Zippo wants to follow a path blazed by Eddie Bauer and Victorinox Swiss Army Brands Inc.
What do Techline cell phones, Sports America magazine, and Crispity Crunch cereals have in common? Synergy is created when two or more businesses produce benefits together that could not be produced separately. Globodynea€™s inability to successfully manage Waterman Publishing illustrates the difficulties associated with unrelated diversification. Diversification strategies involve firmly stepping beyond its existing industries and entering a new value chain. In the early twentieth century, many military battles were fought in series of parallel trenches.
A Pick n Pay executive explained the layoffs by noting that a€?the decision was not taken lightly but was required to ensure the viability of the retail business and its employees into the future.a€?Chilwane, L. The term retrenchment has its origins in trench warfare, which is shown in this World War I photo taken in France.
Executives sometimes decide that bolder moves than retrenchment are needed for their firms to be successful in the future.
Fortune Brands hopes to unlock hidden shareholder value by divesting unrelated brands such as Masterlock.
Executives are sometimes forced to admit that the operations that they want to abandon have no value. Executives sometimes need to reduce the size of their firms to maximize the chances of success. Given how much information is readily available about companies, why do you think investors still struggle to analyze diversified companies?
Executives in charge of firms involved in many different businesses must figure out how to manage such portfolios.
Portfolio planningA process that helps executives make decisions involving their firmsa€™ various industries. The Boston Consulting Group (BCG) matrix is the best-known approach to portfolio planning (Figure 8.7 "The Boston Consulting Group (BCG) Matrix").
Owning a puppy is fun, but companies may want to avoid owning units that are considered to be dogs.
Portfolio planning is a useful tool for analyzing a firma€™s operations, but this tool has limitations. What might executives do to keep employees within dog units motivated and focused on their jobs?
See the license for more details, but that basically means you can share this book as long as you credit the author (but see below), don't make money from it, and do make it available to everyone else under the same terms. However, the publisher has asked for the customary Creative Commons attribution to the original publisher, authors, title, and book URI to be removed. This sequel to the smash hit Cars made $66 million at the box office on its opening weekend and appeared likely to be yet another commercial success for Pixara€™s parent corporation, The Walt Disney Company. In 1923, Disney Brothers Cartoon Studio was started by Walt and his brother Roy in their unclea€™s garage.
His company developed a television series for the American Broadcasting Company (ABC) in 1954 and opened the Disneyland theme park in 1955. ABC was acquired in 1996, along with its very successful sports broadcasting company, ESPN. The executives in charge of a firm such as The Walt Disney Company must decide whether to remain within their present domains or venture into new ones.
A firm can use one, two, or all three as part of their efforts to excel within an industry.Ansoff, H. McDonalda€™s has pursued market penetration in recent years by using Latino themes within some of its advertising. Philadelphia-based Tasty Baking Company has sold its Tastykake snack cakes since 1914 within Pennsylvania and adjoining states.
Coca-Cola Black (a blending of cola and coffee flavors) was launched in 2006 but discontinued in 2008.
This strategic move is known as horizontal integrationPursuing a concentration strategy by acquiring or merging with a rival. In many cases, horizontal integration is aimed at lowering costs by achieving greater economies of scale. Acquiring Tasty Baking was appealing to Flowers Foods, for example, because the name Tastykake is well known for quality in heavily populated areas of the northeastern United States. Some observers were puzzled when Zuffa, the parent company of the Ultimate Fighting Championship (UFC), purchased rival mixed martial arts (MMA) promotion Strikeforce.


One study found that more than 60 percent of mergers and acquisitions erode shareholder wealth while fewer than one in six increases shareholder wealth.Henry, D. Mergers and acquisitions are popular moves for executing a concentration strategy, but executives need to be cautious about horizontal integration because the results are often poor. The firm controlled the iron mines that provided the key ingredient in steel, the coal mines that provided the fuel for steelmaking, the railroads that transported raw material to steel mills, and the steel mills themselves. Firms such as ExxonMobil and ConocoPhillips can be involved in all stages of the value chain, including crude oil exploration, drilling for oil, shipping oil to refineries, refining crude oil into products such as gasoline, distributing fuel to gas stations, and operating gas stations. Although the US government held BP responsible for the disaster, BP cast at least some of the blame on drilling rig owner Transocean and two other suppliers: Halliburton Energy Services (which created the cement casing for the rig on the ocean floor) and Cameron International Corporation (which had sold Transocean blowout prevention equipment that failed to prevent the disaster). Venturing into new portions of the value chain can take a firm into very different businesses. Consider, for example, a situation in which an aluminum company is purchased by a can company. Rental car agencies are able to insist on low prices for the vehicles they buy from automakers because they purchase thousands of cars. Despite its enormous success, one concern for eBay is that many individuals avoid eBay because they are nervous about buying and selling goods online with strangers. Employees at Best Buy and Office Depot are likely to know just a little bit about each of the various brands their store carries.
They can therefore provide customers with accurate and insightful advice about purchases and repairs. By entering the domain of a supplier (backward vertical integration) or a buyer (forward vertical integration), executives can reduce or eliminate the leverage that the supplier or buyer has over the firm.
Executives need to be sure that their firm can recoup the expenses that it absorbs in order to diversify. Unless one side or the other gains a competitive advantage, diversification should be avoided.
Although Honda is best known for its cars and trucks, the company actually started out in the motorcycle business. Ita€™s hard to imagine the logic behind such a move, but Coca-Cola did just this when it purchased Columbia Pictures in 1982 for $750 million. The rugged outdoors image of Eddie Bauera€™s clothing brand has been used effectively to sell sport utility vehicles made by Ford. Not much, but that did not stop Globodyne from buying each of these companies in its quest for synergy in the 2004 movie In Good Company.
While Duryea was confident that a cross-promotional strategy between his advertising division and the other units within the Globodyne universe was a slam-dunk, Waterman employee Dan Foreman saw little congruence between advertisements in Sports America on the one hand and cell phones and breakfast cereals on the other. While buying companies outside a parent companya€™s core competencies can increase the size of the company and in turn its executivesa€™ bank accounts, managing firms unfamiliar to management is generally a risky and losing proposition.
Generally, related diversification (entering a new industry that has important similarities with a firma€™s existing industries) is wiser than unrelated diversification (entering a new industry that lacks such similarities).
In some cases, the answer that executives arrive at involves exiting one or more industries.
If an attacking army advanced enough to force a defending army to abandon a trench, the defenders would move back to the next trench and try to refortify their position. In July 2011, for example, South African grocery store chain Pick n Pay announced plans to release more than 3,000 of its estimated 36,000 workers. Divestment can be especially appealing to executives in charge of firms that have engaged in unrelated diversification.
Surprisingly, this company does not own Fortune magazine, but it has been involved in a diverse set of industries. If selling off part of a business is not possible, the best option may be liquidationShutting down portions of a firma€™s operations, often at a tremendous financial loss.. This can involve fairly modest steps such as retrenchment or more profound restructuring strategies. General Electric (GE), for example, competes in a very wide variety of industries, including financial services, insurance, television, theme parks, electricity generation, lightbulbs, robotics, medical equipment, railroad locomotives, and aircraft jet engines. Using the matrix requires a firma€™s businesses to be categorized as high or low along two dimensions: its share of the market and the growth rate of its industry. With the help of a leading consulting firm, GE developed the attractiveness-strength matrix to examine its diverse activities.
First, portfolio planning oversimplifies the reality of competition by focusing on just two dimensions when analyzing a companya€™s operations within an industry.
Executives grappling with corporate-level strategy must decide in what industry or industries their firms will compete. Each group should create a new portfolio planning technique by selecting two dimensions along which companies can be analyzed. Imagine that you were hired as a consultant by General Electric (GE), a firm that competes with Disney in the movie, television, and theme park industries.
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The fledgling company gained momentum in 1928 when a character was invented that still plays a central role for Disney todaya€”Mickey Mouse. Shortly before its opening, the theme park was featured on the television show to expose the American public to Walta€™s innovative ideas. Disneya€™s theme parks included not only its American locations but also joint ventures in France and Hong Kong.
Pixar executives were justifiably proud that they made successful movies that most studios would view as quirky and too off-the-wall.
In Disneya€™s case, the firm has expanded from its original business (films) and into television, theme parks, and several others. The firma€™s products have become something of a cult hit among customers, who view the products as much tastier than the snack cakes offered by rivals such as Hostess and Little Debbie. In the 1940s, for example, Disney expanded its offerings within the film business by going beyond cartoons and creating movies featuring real actors. Coca-Cola and Pepsi regularly introduce new varietiesa€”such as Coke Zero and Pepsi Cherry Vanillaa€”in an attempt to take market share from each other and from their smaller rivals. This was the reasoning behind several mergers of large oil companies, including BP and Amoco in 1998, Exxon and Mobil in 1999, and Chevron and Texaco in 2001. UFC had such a dominant position within MMA that Strikeforce seemed to add very little for Zuffa. This approach can be very attractive when a firma€™s suppliers or buyers have too much power over the firm and are becoming increasingly profitable at the firma€™s expense.
Having control over all elements of the production process ensured the stability and quality of key inputs. In April 2011, BP sued these three firms for what it viewed as their roles in the oil spill. A lumberyard that started building houses, for example, would find that the skills it developed in the lumber business have very limited value to home construction. People within the aluminum company may believe that they do not need to worry about doing a good job because the can company is guaranteed to use their products. Some firms use this strategy when executives are concerned that a supplier has too much power over their firms. Rather than depend on outside production companies to provide talk shows and movies centered on sports, ESPN created its own production company. Disney has pursued forward vertical integration by operating more than three hundred retail stores that sell merchandise based on Disneya€™s characters and movies. If one automaker stubbornly tries to charge high prices, a rental car agency can simply buy cars from a more accommodating automaker. PayPal addressed this problem by serving, in exchange for a fee, as an intermediary between online buyers and sellers.
While vertical integration involves a firm moving into a new part of a value chain that it is already is within, diversification requires moving into new value chains. When Philip Morris bought 7Up in the late 1970s, it paid four times what 7Up was actually worth. In the case of Philip Morris and 7Up, for example, neither side benefited significantly from joining together. Because films and television are both aspects of entertainment, Disneya€™s purchase of ABC is an example of related diversification. Through competing in this business, Honda developed a unique ability to build small and reliable engines.
Companies must convince consumers to buy these products through marketing activities such as branding and advertising. The high-quality image of Swiss Army knives has been used to sell Swiss Armya€“branded luggage and watches. Executive Carter Duryea was excited when his employer Globodyne purchased Waterman Publishing, the owner of Sports America magazine. Despite his considerable efforts, Duryea was unable to increase ad pages in Sports America because the unrelated nature of Globodynea€™s other business units inhibited his strategy of creating synergy. Decades of research on strategic management suggest that when firms diversify, it is best to a€?stick to the knitting.a€? That is, stay with businesses executives are familiar with and avoid moving into ventures where little expertise exists.
Just over a month earlier, South African officials had approved Walmarta€™s acquisition of a leading local retailer called Massmart.
Investors often struggle to understand the complexity of diversified firms, and this can result in relatively poor performance by the stocks of such firms. As of 2010, the firm consisted of three businesses: spirits (including Jim Beam and Makera€™s Mark), household goods (including Masterlock and Moen Faucets), and golf equipment (including Titleist clubs and balls as well as FootJoy shoes). This involves simply shutting down portions of a firma€™s operations, often at a tremendous financial loss.
When leading a company such as GE, executives must decide which units to grow, which ones to shrink, and which ones to abandon. Portfolio planning is a process that helps executives assess their firmsa€™ prospects for success within each of its industries, offers suggestions about what to do within each industry, and provides ideas for how to allocate resources across industries.
High market share units within slow-growing industries are called cash cowsHigh market share units within slow-growing industries.. This planning approach involves rating each of a firma€™s businesses in terms of the attractiveness of the industry and the firma€™s strength within the industry.
What actions would you recommend that GE take in these three industries to gain advantages over Disney? Disney expanded beyond short cartoons to make its first feature film, Snow White and the Seven Dwarves, in 1937.
One of the hosts of that episode was Ronald Reagan, who twenty-five years later became president of the United States. This segment of the business included childrena€™s books, video games, and 350 stores spread across North American, Europe, and Japan. A good example is 2009a€™s Up!, which made $730 million despite having unusual main characters: a grouchy widower, a misfit a€?Wilderness Explorera€? in search of a merit badge for helping the elderly, and a talking dog. McDonalda€™s, Starbucks, and Subway are three firms that have relied heavily on concentration strategies to become dominant players. Starbucks, for example, has stepped beyond selling coffee beans only in its stores and now sells beans in grocery stores.


More recently, McDonalda€™s has gradually moved more and more of its menu toward healthy items to appeal to customers who are concerned about nutrition. Part of the motivation behind Southwest Airlinesa€™ purchase of AirTran was that AirTran had a significant share of the airline business in citiesa€”especially Atlanta, home of the worlda€™s busiest airporta€”that Southwest had not yet entered. Unlike UFC, Strikeforce had gained exposure on network television through broadcasts on CBS and its partner Showtime.
By entering the domain of a supplier or a buyer, executives can reduce or eliminate the leverage that the supplier or buyer has over the firm. By using vertical integration, Carnegie Steel achieved levels of efficiency never before seen in the steel industry. Some companies try to avoid this problem by forcing their subsidiary to compete with outside suppliers, but this undermines the reason for purchasing the subsidiary in the first place. In the early days of the automobile business, Ford Motor Company created subsidiaries that provided key inputs to vehicles such as rubber, glass, and metal. It is perhaps not surprising that Ford purchased Hertz Corporation, the worlda€™s biggest rental car agency, in 1994. Many firms accomplish this through a merger or an acquisition, while others expand into new industries without the involvement of another firm. Some firms that engage in related diversification aim to develop and exploit a core competencyA skill set that is difficult for competitors to imitate, can be leveraged in different businesses, and contributes to the benefits enjoyed by customers within each business.
When executives decided to diversify into the automobile industry, Honda was successful in part because it leveraged this ability within its new business.
Thus, on the surface, the acquisition of 7Up by Philip Morris seemed to offer the potential for Philip Morris to take its existing marketing skills and apply them within a new industry. Luckily for Coca-Cola, its investment paid offa€”Columbia was sold to Sony for $3.4 billion just seven years later.
As of March 2011, Zippo was examining a wide variety of markets where their brand could be leveraged, including watches, clothing, wallets, pens, liquor flasks, outdoor hand warmers, playing cards, gas grills, and cologne. The acquisition landed him a big promotion and increased his salary to a€?Porsche-leasinga€? size. Seeing little value in owning a failing publishing company, Globodyne promptly sold the division to another conglomerate.
Trench warfare inspired the business term retrenchmentReducing the size of part of a firma€™s operations, often though laying off employees..
Rivalry in the South African grocery business seemed likely to become fiercer, and Pick n Pay executives needed to cut costs for their firm to remain competitive. In some cases, divestment reverses a forward vertical integration strategy, such as when Ford sold Hertz.
This is known as a diversification discountThe tendency of investors to undervalue the shares of a diversified firm..
In December 2010, Fortune Branda€™s CEO announced a plan to separate the three businesses to a€?maximize long-term value for our shareholders and to create exciting opportunities within our businesses.a€?Sauerhaft, R.
Portfolio planning first gained widespread attention in the 1970s, and it remains a popular tool among executives today. Because their industries have bleak prospects, profits from cash cows should not be invested back into cash cows but rather diverted to more promising businesses.
Concentration strategies involve competing within existing domains to expand within those domains. This strategic move brought a very creative and successful animation company under Disneya€™s control.
Disney executives, however, seemed to be adopting a much different approach to moviemaking. When it made this acquisition, Flower Foods announced its intention to begin extensively distributing Tastykakea€™s products within the southeastern United States. Executives in charge of each of these six corporations believed that greater efficiency could be achieved by combining forces with a former rival. Rather than build a presence from nothing in Atlanta, Southwest executives believed that buying a position was prudent. Thus acquiring Strikeforce might help Zuffa gain mainstream exposure of its product.Wagenheim, J. Considering vertical integration alongside Portera€™s five forces model highlights that such moves can create greater profit potential.
This approach ensured that Ford would not be hurt by suppliers holding out for higher prices or providing materials of inferior quality.
ESPN Films has created many of ESPNa€™s best-known programs, including Around the Horn and Pardon the Interruption.
Each time a Hannah Montana book bag is sold through a Disney store, the firm makes a little more profit than it would if the same book bag were sold by a retailer such as Target.
Honda also applied its engine-building skills in the all-terrain vehicle, lawn mower, and boat motor industries.
Although Harley-Davidson and Starbucks both enjoy iconic brands, these strategic resources simply did not transfer effectively to the bottled water and furniture businesses. Zippo executives expect to sell about 12 million lighters this year, which is a 50 percent decline from Zippoa€™s sales levels in the 1990s. Trying to figure out which of these diversification options would be winners, such as the Eddie Bauer-edition Ford Explorer, and which would be losers, such as Harley-branded bottled water, was a key challenge facing Zippo executives.
After the sale, the executives that had been rewarded for the initial purchase of Waterman Publishing, including Duryea, were fired. Executives sometimes attempt to unlock hidden shareholder value by breaking up diversified companies. Low market share units within slow-growing industries are called dogsLow market share units within slow-growing industries..
For example, if workers know that their firma€™s executives believe in the BCG matrix and that their subsidiary is classified as a dog, then they may give up any hope for the future. Roy Disney died just two months after Disney World opened; his brother Walt had passed in 1966 while planning the creation of the Orlando facility.
In a February 2011 speech, Disneya€™s chief financial officer noted that Disney intended to emphasize movie franchises such as Toy Story and Cars that can support sequels and sell merchandise. The flavors of Christmas were the focus of 2007a€™s set, which included Sugar Plum, Christmas Tree, Egg Nog, and Christmas Ham.
Considering horizontal integration alongside Portera€™s five forces model highlights that such moves also reduce the intensity of rivalry in an industry and thereby make the industry more profitable. Firms can pursue vertical integration on their own, such as when Apple opened stores bearing its brand, or through a merger or acquisition, such as when eBay purchased PayPal. By owning its own production company, ESPN can ensure that it has a steady flow of programs that meet its needs.
By 2005, selling vehicles to rental car companies had become less important to Ford and Ford was struggling financially. A core competency is a skill set that is difficult for competitors to imitate, can be leveraged in different businesses, and contributes to the benefits enjoyed by customers within each business.Prahalad, C. This downward trend is likely to continue as smoking becomes less and less attractive in many countries. Much like an army under attack, firms using this strategy hope to make just a small retreat rather than losing a battle for survival. Without becoming smaller and more cost effective, Pick n Pay and other firms that use retrenchment can risk total failure. General Motors (GM), for example, turned a parts supplier called Delphi Automotive Systems Corporation from a GM subsidiary into an independent firm. Such moves are painful because massive investments are written off, but becoming a€?leaner and meanera€? may save a company from total ruin. Similarly, workers within cash cow units could become dismayed once they realize that the profits that they help create will be diverted to boost other areas of the firm. Some exceptions may apply to oversized and overweight items, as well as tires and hazardous materials. Marvel was attractive because of its vast roster of popular characters, including Iron Man, the X-Men, the Incredible Hulk, the Fantastic Four, and Captain America. Market penetrationAn attempt to gain additional share of existing markets using existing products. In early 2011, Jones Soda let it customers choose the winter 2011 flavors via a poll on its website. This chaptera€™s opening vignette suggests that Disney and Pixar may be experiencing this problem.
High market share units within fast-growing industries are called starsHigh market share units within fast-growing industries..
Backward integration occurs when a firm enters a suppliera€™s business while forward vertical integration occurs when a firm enters a customera€™s business. In addition to featuring these characters in movies, Disney could build attractions around them within its theme parks. Other acquisitions fail because the buyer pays more for a target company than that company is worth and the buyer never earns back the premium it paid. For example, Mattel purchased The Learning Company in 1999 for $3.6 billion and sold it a year later for $430 milliona€”12 percent of the original purchase price. GM stockholders received 0.69893 shares of Delphi for every share of stock they owned in GM. Because this tool only deals with existing businesses, it cannot reveal what new industries a firm should consider entering.
Diversification involves entering entirely new industries; this can be an industry that is related or unrelated to a firma€™s existing activities.
A stockholder who owned 100 shares of GM received 69 shares of the new company plus a small cash payment in lieu of a fractional share. In June 2011, plans to spin offCreating a new company whose stock is owned by investors out of a piece of a bigger company. Finally, low-market-share units within fast-growing industries are called question marksLow market share units within fast-growing industries.. Sometimes being smart about corporate-level strategy requires shrinking the firm through retrenchment or restructuring. The hope is that the buzz that surrounds the unusual flavors each year will grab customersa€™ attention and get them to trya€”and become hooked ona€”Jones Sodaa€™s more traditional flavors. Disney was much bigger than Miramax and Pixar when it joined with these firms in 1993 and 2006, respectively, thus these two horizontal integration moves are considered to be acquisitions. When the acquisition was undone in 2007, Daimler recouped only $1.5 billion worth of valuea€”a mere 4 percent of what it paid. Finally, portfolio planning can be useful for analyzing firms that participate in a wide variety of industries. Would Disneya€™s financial emphasis destroy the creativity that made Pixar worth more than $7 billion in the first place?
For example, Newell Rubbermaid is skilled at identifying underperforming brands and integrating them into their three business groups: (1) home and family, (2) office products, and (3) tools, hardware, and commercial products.




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