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    Failed Diversification:: 1. National Semiconductor Corporation

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    Milind Vatsi
    National Semiconductor Corporation failed in its diversification attempt from semiconductors into electronic consumer products in the 1970s because it lacked the capabilities needed for retail manufacturing. Northrop Grumman similarly struggled when diversifying into shipbuilding for the Navy in 2001 due to high costs and lack of fit with its other businesses. Virgin Cola also failed in its attempt to break into the cola market dominated by Pepsi and Coca Cola, as it struggled to gain distribution and market share against significantly larger competitors.

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    Failed Diversification:: 1. National Semiconductor Corporation

    Uploaded by

    Milind Vatsi
    227 views1 page
    National Semiconductor Corporation failed in its diversification attempt from semiconductors into electronic consumer products in the 1970s because it lacked the capabilities needed for retail manufacturing. Northrop Grumman similarly struggled when diversifying into shipbuilding for the Navy in 2001 due to high costs and lack of fit with its other businesses. Virgin Cola also failed in its attempt to break into the cola market dominated by Pepsi and Coca Cola, as it struggled to gain distribution and market share against significantly larger competitors.

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    Failed Diversification

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    National Semiconductor Corporation failed in its diversification attempt from semiconductors into electronic consumer products in the 1970s because it lacked the capabilities needed for retail manufacturing. Northrop Grumman similarly struggled when diversifying into shipbuilding for the Navy in 2001 due to high costs and lack of fit with its other businesses. Virgin Cola also failed in its attempt to break into the cola market dominated by Pepsi and Coca Cola, as it struggled to gain distribution and market share against significantly larger competitors.

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    227 views1 page

    Failed Diversification:: 1. National Semiconductor Corporation

    Uploaded by

    Milind Vatsi
    National Semiconductor Corporation failed in its diversification attempt from semiconductors into electronic consumer products in the 1970s because it lacked the capabilities needed for retail manufacturing. Northrop Grumman similarly struggled when diversifying into shipbuilding for the Navy in 2001 due to high costs and lack of fit with its other businesses. Virgin Cola also failed in its attempt to break into the cola market dominated by Pepsi and Coca Cola, as it struggled to gain distribution and market share against significantly larger competitors.

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    of 1

    Failed Diversification:

    1. National Semiconductor Corporation


    One example of failed diversification is National Semiconductor Corporation. The
    company tried to make electronic consumer products in addition to the semi-conductors
    that went inside them (in the 1970s). But they overlooked one major flaw: the company
    wasn’t suited for retail manufacturing. In the process, it was crushed by companies that
    were very well suited for that purpose as well as insulated against any kind of financial
    downturn. By the time digital watches became popular in America (the company
    specialized in analog devices and subsystems), NSC had been driven from the
    marketplace, suffering huge losses that largely overshadowed its success in the arena of
    semiconductors.

    2. Northrop Grumman
    A more recent example of failed diversification is Northrop Grumman–an American
    global aerospace and defense technology company and the fifth-largest defense
    contractor in the world as of 2015, according to the wiki. Northrop has always been
    successful with electronics and robotic systems, but in 2001 it diversified into
    shipbuilding for the Navy. The venture was obviously very expensive, and a titanic one at
    that. The diversified plan had razor-thin margins and did not tune with any of Northrop’s
    other businesses. In 2011, Northrop declared that they got out of the shipping business to
    avoid “a drag on its bottom line for years to come.”

    3. Virgin Cola
    Virgin’s move to lock horns with Pepsi and Coca Cola is one that is legendary. Though
    Virgin’s brand encompassed virtually everything—from airlines to financial services,
    Richard Branson, founder of the Virgin empire, stretched himself too far. Coca Cola and
    Pepsi, as we all know, is synonymous with the elixir of life. Branson joined forces with
    Cott Corporation, and produced Cola under the Virgin name and marketed it
    spectacularly in New York’s Times Square. This move raised eyebrows from market
    observers as they knew it was difficult to take down Pepsi and Coca Cola.

    Although Virgin Cola was priced significantly lower (15 to 20%) than the two leading
    brands, there were not enough customers. Partly, issues with distribution were to be
    blamed. Pepsi and Coca Cola managed to block Virgin from getting shelf space in more
    than half of the UK’s leading supermarkets. Meanwhile, Coke doubled its advertising
    budget. Virgin Cola failed to make even a single scratch in its worldwide sales. The band
    struggled to gain 3% of the market and has never made a profit even on its home turf, the
    UK.

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