DIVERSIFICATION

To Diversify or Not to Diversify

To Diversify or Not to Diversify

Introduction

The issue of corporate strategies for business development is a matter crucial and this regardless of size. Companies do not limit their activity to a single production: competition forces companies to constantly be on various markets and thus to diversify their business. Among the main policy options that global available to the company, diversifying is thus, an alternative widespread in strategic maneuvers of companies. However, other alternatives are possible in terms as corporate specialization, integration and / or internationalization (Huff, 2008). All companies should enhance over time their business if they want to ensure development constant. The objective of this paper is to clarify the terms of diversification and to show that whether it is good for a company to diversify or not and show that this strategy is part of a dynamic. When the main reason for diversification is to mastering productions upstream or downstream of the base of core business, this is a diversification or vertical integration; when diversification is not part of the extension of the core business, it is called horizontal diversification oblique or transverse.

Discussion

Warren Buffett, one of the world's largest investors, said: "Diversification is a protection against ignorance. Makes very little sense for those who know what they are doing”. Here in this paper we are going focus on two premier companies Marriot (successful Diversification) and

An example of successful diversification, as well as some wrong decisions relating to the development of new business, the company serves as a Marriott. The company began by Marriott restaurant business in Washington. Since visitors conventionally ordered some snacks for the road on the way to the airport, the Marriott, it was decided to do catering on planes. After that, the company began to serve the institution (Ginter, 2008). Then Marriott customer base was expanded through a network of family restaurants, and participation in the hospitality industry. Then there were the restaurants, snack bars and shops in airports and restaurants with exquisite cuisine. Marriott Hotel business was supplemented by cruise ships, amusement theme parks, major travel agencies, cheap motels and centers for senior citizens.

Diversification at the Marriott was based on extensive experience in catering and high quality customer service. Kitchen Company Marriott cook according to six thousand recipes on standardized technological maps, all services provided in hotels, also standardized and carefully documented in the form of well-designed instruction. The company divided the large number of activities across all departments. Supply and distribution systems in the food sector are composed of nine regional centers for supplies. As a result, Marriott makes a profit in this area is 50% higher than any other companies engaged in the hotel business. At Marriott fully, integrated division of Real Estate, which acquires land for development, designs and builds new regional enterprises.

Diversification strategy in the Marriott is the balance between absorbed and new ventures. New businesses and small acquisitions are used for the initial implementation of a new sphere, depending on the level of opportunities for sharing ...