Diversification

An important corporate$-$level strategic decision is whether to pursue diversification, which involves moving into new lines of business. This activity is important because diversification is one of the key ways that companies grow revenues and$/$or reduce risks.

The goal of this activity is to challenge your knowledge of the different forms of diversification.

For each company example, select the type of diversification the statement best represents.

Luxurv fashinn hrand Coach, Inc. acquired Kate Spade New York$-$another luxury fashion and lifestyle brand$-$in $2017.$

Fast fashion retail giant, Zara is able to get designs from the catwalk to the retail store at incredible speeds. Zara can do this because it has acauired most of its supply chain, including designers, manufacturers, and distributors.

C'orox Company, best known for bleach and cleaning products, purchased Burt's Bees, best known for its natural beauty and personal care products, in $2007.$

Unrelated diversification $v$

In $2018,$ Novartis. a Swiss multinational pharmaceutical company, acquired Avexis, a clinical$-$stage gene therapy company.

In the $1930$s$,$ Mars Incorporated $($maker of Snickers and other popular candies$)$ purchased Chappell Brothers canned dog food company. Much of Mars' business today comes from pet food brands such as Whiskas and Pedigree. In $2017,$ Mars acquired VCA, a company that owns hundreds of dog day care facilities and animal hospitals, to add to its Mars Petcare portfolio.

In $2018,$ Boeing aerospace company announced its plans to buy KLX$,$ a company that distributes aerospace fasteners and consumables.