Life as being Versatile

A strategy will be defined as the distribution of the firm resources, and hence the distribution of its output among industries. Corporate businesses always pose the question about their diversification strategies, and the advantages and disadvantages associated. Many companies became bothered by putting all its eggs into one basket; therefore companies had to come up with certain strategies. Conglomerates are companies that follow the diversification strategies. Diversification is reducing risk by investing a number of assets. In the 1950s, diversification gave companies a boost, while still increasing into today. Fortune 500 companies are best described as conglomerates. These conglomerates found out by taking risk in a single stock they would be manifested to index movements and stocks relative movements. Portfolio models in corporate business are looked at as either vertical or horizontal. Vertical is expanding the product line and horizontal is integrating with the supply chain. Companies diversify to grow, to utilize existing resources or to escape their environments. Advantages could include achievement on the economic scale and to expand product offering while disadvantages could be difficulty coordinating the business. Another problem with diversifying can be the manager lack of knowledge about the business. Successful strategies of managers are developing skills in diversification. They must also have well-developed beliefs how to diversify in order to achieve synergies. To achieve synergy you must exploit economic scale and scope while efficiently allocating capital.
In comparison the BellSouth Corporation and BIC Corporation utilized the diversification strategy. BellSouth was incorporated in 1983 providing telecommunications through Internet, video, voice, and entertainment. BellSouth was formed through a breakup with American Telephone and Telegraph. BellSouth began the as the 12th largest corporation in the United States. AT&T used the south as a testing ground, which gave BellSouth a lead in high Technology services. Advances in technology allowed companies to tie directly into the long distance system through microwave antennas. In the late 1980s BellSouth was the fastest holding company. Adding more than six hundred thousand lines a year, BellSouth had the largest sales at around fourteen billion. BellSouth won a contract with the government, but withdrew their bid because of accusations about the improperly obtained information from government employees. So the government gave the contract to AT&T. Competition heated up stemming from the breakup, kept BellSouth from expanding into a broader range of services. Companies began to migrate into BellSouth territories and stringing fiber optic cable. BellSouth moved cautiously to avoid the invasion. BellSouth invested in a joint venture with Disney producing innovative entertainment programs. This was they first step into the media and entertainment world. By partnering with several companies BellSouth had to lay off some thousands of workers. In the late 1990s competition was not bad for business, as BellSouth lost accounts, they picked up money by selling access to its lines and offering around the clock customer service. Although changing drastically, business continued to grow in revenue and services.
While the BIC Corporation was incorporated in the late 1950s, they were the leading manufacture of disposable ballpoint pens and cigarette lighters, BIC also manufacture and sale stationery products. Marcel Bich founded BIC and set up his business manufacturing parts for fountain pens and mechanical pencils. The very expensive ballpoint pens were popular in Europe, while in the United States the pen did not catch on quickly. BIC aggressively launched television advertising that the BIC pen could perform as well as some leading pens. The advertisement included the pen being drilled, shot from a gun, and even fire blasted, and the pen still worked. BIC expanded its products by selling lighters and shavers for half-price of what Gillette market price. Battling Gillette, BIC again advertised heavily with catchy commercials. By the 1980s, BIC was known as the leading maker of lighters and shavers dropping the pen from its name to become BIC Corporation. Although with business booming BIC faced some challenges. A few people had died because the malfunctioning of the BIC lighters. According to BIC, the company defended itself in more than fifty lawsuits involving lighters between 1988 and 1993, losing only three (fundinguniverse.com). BIC further diversified by launching pocket-sized perfume, which lasted less than a year in the United States. After that BIC purchased Whiteout products, correction white ink for pens, but business did not change substantially.
Both BIC Corporation and BellSouth came up with different diversification strategies. In comparison BellSouth was successful while BIC Corporation was not. When BellSouth had their back against the wall and facing challenges, they partnered with Disney and other companies to provide other services and increase their revenue. Now the BIC Corporation tried to sell pocket perfume that only lasted a year. Then when purchasing the Whiteout products, the business did not really grow. BellSouth used their disadvantages as advantages, when competitors started to rise; BellSouth charged them to use their lines. I would recommend the BIC Corporation to expand their product of shavers and lighters. With the shavers they should look at the female user and the male user. Take advantage of colors, comfort, and durability. Now with the lighters, keep in mind safety of the children, they should also come up with creative designs. BIC had great marketing plans; they should have research the market of office equipment. This research could enhance the Whiteout products. Now the perfume was out their league. Society was not ready for a business that mainly sold products for cigarettes and hair removal to make a fragrance. This fragrance was unpleasant to the nose of the people. Partnering with other businesses in their market could have increased their chance for success. By partnering this would allow the BIC Corporation to grow in size and sales.
Diversification can be disastrous for many firms, but many diversified firms have been successful. Size alone does not guarantee an advantage. The critical factor in success is management expertise and implementing corporate strategy. Conglomerates have mastered these strategies. By becoming diversified, it opens your business to a new market to increase your revenue. Businesses have to do research, by this you can come up with plans to attack the particular market. Being diverse can have a lot of advantages and disadvantages, but with a well thought out strategy your business can be beyond successful.

Works Cited Boone, L., & Kurtz, D. (2011). Contemporary business. (13th ed.). Lecrew, D. (1984). Diversification strategy and performance. The Journal of Industrial Economics , XXXIII, (n.d.). Retrieved from http://www.fundinguniverse.com/company-histories