Introduction
Diversification is a strategy used by most companies where the company undertakes to venture into business avenues or areas that are mainly different from the original business. Diversification ensures that such companies increase their profits as well as market share, thus maintaining a good performance in the long- run (Kenny 3). When a company decides to diversify its operations, a number of factors are considered. Factors such as the attractiveness of the potential market as well as the strengths are considered. In this paper, we are going to consider some of the diversified companies in some industries and evaluate the industries attractiveness, using the nine-cell matrix.
The nine-cell matrix
The nine-cell matrix is a geographical representation of the competitiveness versus the attractiveness of a certain industry or company. The x-axis represents competitiveness while the y-axis represents attractiveness. The matrix has nine cells as shown below
Score are distributed according to the business attractiveness, with the most attractive having a score of 6.7 and above, while those with a score of 3.3 to 6.7 are rated as average. A weak attractiveness is a score of below 3.3.
The chemical industry
The American Cyanamid is probably the most diversified company in the chemical industry. The company has thirty subsidiaries. After a number of years of controversies, the company recently changed its name to Wyreth in 1994. The company, which started as chemical manufacturing company, specialized mainly in the production of polio vaccine known as Sabin. The company opened its doors in 1907 and was founded by Frank Washburn. The company through collaboration as well as opening other subsidiaries such as Cytech industries ventured into production of other products such as household products as well as food products. It is also involved in research especially on life sciences. The company conducts research on medical and agricultural products and thereafter produces and markets the products globally. Using the nine-cell matrix analysis, the company and the industry would score very high. In the agricultural industry, the increasing population, and the need to ensure global food security calls for intense research on various aspects of the industry. American Cyanamid has undertaken to conduct research on agricultural products and chemicals. This would mean that as new products that suits the global market and meets the market requirements are developed, the company would increase its market base and thereby maintaining long run performance. As indicated earlier the company has other subsidiaries, such as Cytech, which mainly produces food products. This provides the company with a future advantage, as the need responsible eating habits increases. The American Cyanamid would therefore score a high score of more than 6.7 on the nine-cell matrix signifying strong attractiveness and competiveness of the industries of interest.
Digital camera industry
Eastman Kodak is a US multinational company, which for a long time, has been known for production of photographic films. However as competition increases, the company has as well shifted its focus to production of digital equipment for photography and photographic printing. This has been occasioned by the need to give its customer globally a complete line of products coupled by a number of years of perfection in production of films, which has seen consumer loyalty increase o very high levels. The Company has now engaged itself in production of digital printing machines, cameras, picture frames, image sensors, motion picture and TV production, document imaging as well as inkjet printer and ink cartridges. The company has received many awards such as the Academy awards, the Ninth Oscar awards. The company has also collaborated with many companies in its operations, such as Creo Inc, Scitex Corporation, Heidelberger Druckmanschinem AG and many more. On the other hand, the company partners with Motorola for imaging. These achievements have come about after huge investments in research and development. Basing on these acquisitions and partnerships, the company as well as the industry is guaranteed of future business stability as the world moves toward digitalization of most of the aspects of life.
Automobile industry
In the automobile industry, diversification is inevitable. Players in the industry are working day and night through research and development to try and out do the other. Amid this stiff competition comes diversification. Toyota Motor Corporation has remained the leading automobile company in terms of diversification and global market penetration. The company has subsidiaries in brands like Scion, Lexus, Daihatsu to name but a few. The company diversified its operations from automobile production to financial services, telecommunications leisure boats and housing. The company’s involvement in financial services enabled the company to increase its credit sales volumes through provision of car financing to its customer. However, the company has tried to diversify its operations as much as possible, on the nine-cell matrix the company would score relatively below 6.7, thus getting an average score.
Mobile phone industry
In the mobile phone industry, diversification has taken a central role. For example, in the year 2000, the electronics-manufacturing powerhouse, sharp, hit the market by becoming the first company to introduce mobile phones, which are camera, equipped. The company, which started as an electronic producing company, has recently ventured into production of mobile phones that has received a wide market acceptance due to their exemplary features and qualities. The company would score and average score on the nine-cell matrix.
Solar panel industry
One of the companies in the solar panel industry that has diversified to other areas include is Kyocera corporation. The company started as a ceramic products manufacturer. It has diversified its operations through research, development, mergers as well as acquisition to production of solar panels, telecommunication gadgets, imaging equipment and many more. This has surged the company, and it scores over 6.7 on nine-cell matrix.
Reference List
Kenny, Graham. Diversification strategy. New York: Kogan Page, 2009.