Diversification Strategies - Research Paper Example

The company is among the foremost producers in majority of the markets where it operates in. The products manufactured by 3M are delivered through several distribution channels including wholesalers, distributors, retailers and dealers among others. As of 2010, 3M had 80,057 employees, out of which 32,955 were engaged in the business operations located in the United States and the rest globally. For the year ending 2010, 3M generated net sales equivalent to $ 26.7 billion which was a 15.3% increment from the year 2009.

The operating income of the company also increased by 22.9% in the year 2010 as compared to that of 2009 (3M, 2010). Sears, Roebuck & Co. is amongst the principal retailers in the United States, functioning in all the fifty states of US in addition to Puerto Rico. The company has very limited global presence and operates internationally only in Canada. The company merged with Kmart to form Sears Holding Corporation in 2004. The total revenue of the company in 2010 was $43,326 million while that in the year 2009 was $44,043 million.

The revenue value of the company in 2008 was $46,440 and had been decreasing over the years. As of January, 2011, the company had 280,000 employees in the US and around 32,000 in Canada (Sears Holdings Corporation, 2010). Although Sears, Roebuck & Co was always primarily in retail business, in the early 1980s the company had diversified into real estate as well as brokerage services through its subsidiary Allstate. However, post the diversification though the performance of the finance segment of the company was reasonable, the retail group of the company suffered as it failed to respond to altering times (Monks & Minow, 2008).

Diversification Outcomes of the Two Corporations and Reasons for the Different Outcomes The diversification of 3M into its six different segments had produced positive outcomes for the company. 3M is recognized for its aptitude to produce new products and generate new businesses. It can be substantiated from the fact that 30 percent of its revenue comes from products developed during the preceding five years. The company had time and again extended its existing technological proficiency to generate a comparable yet innovative product.

3M’s success can be attributed to variety of factors, such as a corporate culture that promotes risk taking, a focus on resolving client problems, the utilization of extended and long-term goals, and independence of the employees to follow their own ideas. Furthermore, 3M consistently follows the system of sharing technologies and expertise amongst the different business segments. It also pursues a reward structure that recognizes innovators in the organization. Thus, 3M had succeeded in diversifying its business by leveraging its technological competence (3M, 2011).

The Sears, Roebuck & Co had been struggling since the past couple of decades, trying first one approach and then another, looking for sustainable growth and momentum and an improved image. As discussed earlier, Sears had diversified into financial services and specialty retailing during the 1980’s. However, after its diversification into real estate and other financial services, Sears could not maintain its performance in