Dave Shen

Because market conditions are dynamic and competitive, a firm needs to ensure that their corporate strategy is rooted in business strategies that produce sustainable competitive advantages. Companies that are especially in the early stages of growth of the firm should focus on a portfolio of businesses that can leverage, enhance, or create strategic assets which are important to long-term competitive advantages of diversification. It can be related if the firm has existing competencies that can be leveraged but there can be situations where a firm wants to enter a business that does not have all the assets to form the new business. Acquisition would be an example of unrelated diversification. Upon Steve Jobs return to Apple in 1997, Apple had primarily focused on the PC market. But he had realized that it could no longer win the “PC” business against Microsoft and conceded it to be lost — the focus of Apple was to focus its products to center around the consumer’s digital lifestyle — photos, video, music. In 2001, it had introduced the iPod — not the first MP3 player on the market but it was unique because it had an end-to-end ecosystem — where Apple controlled the entire user experience. The iPod business allowed Apple to leverage their marketing, user experience, technical, and industrial design competencies and using another corporation’s MP3 Player development experience (PortalPlayer) to develop new strategic assets support its new business strategy — and new life into Apple. Its success with the iPod has allowed them to diversify again into the smartphones business.