From the course: Designing Growth Strategies
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Creating new offerings for new customers
From the course: Designing Growth Strategies
Creating new offerings for new customers
- Pursuing growth by radical diversification. That is creating or acquiring your business where you offer entirely new products and services to entirely new target customers can be a high-risk strategy. How large the risks are depends on the extent to which the new business leverages the core capabilities of the company's existing operations. The oil giant Exxon's failed attempt to diversify into the computer business illustrates well the hazards of entering an entirely new business that requires a very different set of core capabilities than the company's existing operations. The story goes back to the late 1970's when after the Egypt Israel war Exxon faced an environment of very high oil prices and sharp contraction in the demand for oil. Exxon looked around for growth opportunities in new industries that were large in size, likely to keep growing at a double-digit pace, and, acquired lots of capital. It honed in…
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