going away from core business - need examples
Discussion
Just writing an article, and needed some examples of companies going away from their core business. The best example I know is about Coca Cola diversifying into shrimp farming, but I can't seem to find many details on it, does anyone here know more? I heard about it through the writings of Warren Buffet so I assume its real?
Does anyone know anymore examples that are reasonably interesting, whether they were succesful or not?
Does anyone know anymore examples that are reasonably interesting, whether they were succesful or not?
dcw@pr said:
Just writing an article, and needed some examples of companies going away from their core business. The best example I know is about Coca Cola diversifying into shrimp farming, but I can't seem to find many details on it, does anyone here know more? I heard about it through the writings of Warren Buffet so I assume its real?
Does anyone know anymore examples that are reasonably interesting, whether they were succesful or not?
such as the examples already quoted, those that are successful seem to typically be building upon their existing core business and simply going off on a slight tangent and better exploiting their knowledge base/branding ...
eg, harley davidson - core business is of course motorcycles, but their accessories market is hugely successful.
is this diversifying? yes/no? discuss ...
i vaguely recall it was adam smith who said (to the effect) - "to survive, first you must specialise" ...
Most of the examples given have logic, such as a (reasonably) rational extension to their current business. You will also see examples such as Philip Morris deliberatley moving into foodstuff, recognising the need to move from just tobacco. On tobacco, look at BAT - they found themselves very heavily involved in finance (wasn't it Zurich, who they span off a decade or so back?)
For the bizarre, you should look at the conglomerates. They hoover up another conglomerate on the periphery of their own core business. The purchased group already had some small business that was on the periphery of their own core business (probably from an earlier takeover), so you end up with an aberration. Unfortunately all my good books are out on loan, so I can't recall any of the classics, but consider aggressive acquirers like PepsiCo, General Electric (I'm sure Jack Welch had a few oddballs), GM and the tobacco companies.
LVMH is worth looking at. IIRC, Bernard Arnault(?) came into the company when it was in mining. Hidden away in the accounts was the licence for a fashion brand (possible the fragrance licence for Christian Dior). He saw the opportunity and the rest is history.
And of course, a classic case is Berkshire Hathaway itself. IIRC, it started out as a cotton mill.
For the bizarre, you should look at the conglomerates. They hoover up another conglomerate on the periphery of their own core business. The purchased group already had some small business that was on the periphery of their own core business (probably from an earlier takeover), so you end up with an aberration. Unfortunately all my good books are out on loan, so I can't recall any of the classics, but consider aggressive acquirers like PepsiCo, General Electric (I'm sure Jack Welch had a few oddballs), GM and the tobacco companies.
LVMH is worth looking at. IIRC, Bernard Arnault(?) came into the company when it was in mining. Hidden away in the accounts was the licence for a fashion brand (possible the fragrance licence for Christian Dior). He saw the opportunity and the rest is history.
And of course, a classic case is Berkshire Hathaway itself. IIRC, it started out as a cotton mill.
An aluminium company in Seattle got into selling electricity in the late 90's
San Fransico ran out of electricity and was buying it in from all over America forcing the price higher and higher. Someone at this aluminium company who was privvy to a previous block purchase of electricy worked out that if they didnt smelt aluminium they could make more money selling the block bought electricity and shut the factory for three months with everyone on full pay.
Can you even begin to imagine what it was like suggesting that to the board?
If we dont open, we make more money...
Could be apocryphal I suppose but I was told it by a chap in Seattle.
San Fransico ran out of electricity and was buying it in from all over America forcing the price higher and higher. Someone at this aluminium company who was privvy to a previous block purchase of electricy worked out that if they didnt smelt aluminium they could make more money selling the block bought electricity and shut the factory for three months with everyone on full pay.
Can you even begin to imagine what it was like suggesting that to the board?
If we dont open, we make more money...
Could be apocryphal I suppose but I was told it by a chap in Seattle.
WPP (Wire and Paper Products) were once the biggest manufacturer of paper clips.
They are now the world's largest advertising agency.
Marks and Spencer > food > financial services
Apple > computers > music (although related)
McLaren > Formula 1 > road cars > HiFi
Hanson > oil > US teen band (!)
They are now the world's largest advertising agency.
Marks and Spencer > food > financial services
Apple > computers > music (although related)
McLaren > Formula 1 > road cars > HiFi
Hanson > oil > US teen band (!)
dick dastardly said:
Lamborghini went from tractors to supercars, and Hilton Group supposedly now makes more money from gambling than it does hotels!
Not really. A huge succesful engineering company started a small supercar business, because MR lamborgini had been really pissed off by Mr Ferrari when try to buy a Ferrari. sold off many years later.
tractor business still doing very well
www.samedeutz-fahr.com/lamborghini/ranges/
B
Well, Nokia defintely make/made tyres, see here: http://press.nokia.com/PR/199505/777875_5.html
Don't know about timber!
Don't know about timber!
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