wk 12 case diversification strategy_to apply(1)

wk 12 case diversification strategy_to apply(1) - Related...

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Related or unrelated Diversification Acquiring Company Uses Service Commitments to Enhance Efficiency When Mexican steel company Mittal acquired Imexsa, a manufacturing operation that was formerly state-owned, the Imexsa plant was operating at 20 percent of capacity and losing money. To remedy the problem, Mittal initiated a program of internal service agreements designed to generate commitments to improve by every department. For example, the head of maintenance might promise to perform preventive maintenance on a machine within a four-hour window as long as he was notified at least one week in advance of the scheduled downtime. In other words, both sides had to agree to a specific arrangement and uphold their commitments. During the initiative, of the 140 internal service agreements made by Imexsa, more than four out of five were fulfilled to at least a 95 per cent satisfaction level. This example shows the potential power of commitments when used appropriately by acquiring firms. Three conditions must be met for commitments to work: 1) shared understanding of what is needed and what has been agreed to; 2) belief that the both parties have the skills and ability to deliver; and, 3) both parties have to be motivated to deliver. When these conditions are met, commitments can aid both parent and “child” to achieve its goals. Related or unrelated Diversification Wal-Mart Enters the Financial Services Industry Since 2002, Wal-Mart has steadily built alliances with financial-service providers, such as MoneyGram International and SunTrust Banks, to offer services such as bargain-priced money orders and wire transfers. It has bank branches operated by partners in nearly 1,000 of its massive supercenters. Further, it has increased the pace. SunTrust is experimenting with nearly 45 in-store bank branches, co-branded as “Wal-Mart Money Center by SunTrust,” with plans to expand to about 1000 of them by early 2006. Customers are already reaping the benefit. They can cash payroll checks for just $3, transfer money to Mexico for $9.46, and buy a money order for 46 cents. (Some competitors charge twice as much — these are mostly high-margin, highly fragmented businesses in which the poor and immigrants are often at the mercy of unscrupulous operators.) Says a Wal-Mart executive, “Helping the underserved customer gets right at what we like to be known for.” And she adds that more important than the unit’s profits, is that
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This note was uploaded on 11/21/2010 for the course BBA ECON 4131 taught by Professor Profwong during the Spring '10 term at HKU.

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wk 12 case diversification strategy_to apply(1) - Related...

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