Coca-Cola’s Diversification You may be familiar with the story of New Coke. To recap, in the mid-1980s, Coca-Cola reformulated its flagship soft drink in an attempt to better compete with Pepsi. The new drink, named New Coke, failed miserably. But Coca-Cola saved its business by rereleasing the original formulation of Coke under the name Coca-Cola Classic. That, in and of itself, is an excellent case study in business management. However, the more contemporary story is how Coca-Cola has changed its business plan so that no one drink—not even Coke—can heavily influence the company’s success and failure. After years of diversification and acquisition, Coca-Cola currently offers more than 500 brands ranging from soft drinks to fruit juices to water. Additionally, it sells its products in over 200 nations. Nokia’s Market Shift Not so long ago, Nokia was one of the leading makers of cell phones. But technological innovations like the iPhone left Nokia struggling to compete. The solution? Get out of the business of cell phones. In a bold move, Nokia sold its cell phone division to Microsoft and shifted its focus to its other technological endeavors. This helped stabilize the company and prevent greater losses. In an interesting twist, Microsoft recently announced that it’s selling the cell phone business it acquired from Nokia to Foxconn Technology. Foxconn has, in turn, struck a deal with Nokia to use the Nokia name on future cell phones.§ Nokia will earn revenue by licensing its name to a product the company was smart enough to stop making. Questions- What is diversification? Why did coca cola failed in diversification process in 1980s? What is Licensing? How this strategy will help Nokia in capturing back the market? Do you think Nokia could have think something else rather than selling itself to Microsoft? Give reasons to support your answer.
Coca-Cola’s Diversification
You may be familiar with the story of New Coke. To recap, in the mid-1980s, Coca-Cola reformulated its flagship soft drink in an attempt to better compete with Pepsi. The new drink, named New Coke, failed miserably. But Coca-Cola saved its business by rereleasing the original formulation of Coke under the name Coca-Cola Classic. That, in and of itself, is an excellent case study in business management. However, the more contemporary story is how Coca-Cola has changed its business plan so that no one drink—not even Coke—can heavily influence the company’s success and failure. After years of diversification and acquisition, Coca-Cola currently offers more than 500 brands ranging from soft drinks to fruit juices to water. Additionally, it sells its products in over 200 nations.
Nokia’s Market Shift
Not so long ago, Nokia was one of the leading makers of cell phones. But technological innovations like the iPhone left Nokia struggling to compete. The solution? Get out of the business of cell phones. In a bold move, Nokia sold its cell phone division to Microsoft and shifted its focus to its other technological endeavors. This helped stabilize the company and prevent greater losses. In an interesting twist, Microsoft recently announced that it’s selling the cell phone business it acquired from Nokia to Foxconn Technology. Foxconn has, in turn, struck a deal with Nokia to use the Nokia name on future cell phones.§ Nokia will earn revenue by licensing its name to a product the company was smart enough to stop making.
Questions-
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What is diversification? Why did coca cola failed in diversification process in 1980s?
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What is Licensing? How this strategy will help Nokia in capturing back the market? Do you think Nokia could have think something else rather than selling itself to Microsoft? Give reasons to support your answer.
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