Remember Samara from The Ring? That terrifying little girl who would crawl out of the television to haunt those who watched her on a cursed videotape? The thought of being haunted through a videotape terrified moviegoers back in 2002. In today’s world, the threat of being haunted by Samara doesn’t seem so frightening simply because the technology used to spread her curse — the VCR — is no longer used. In fact, VCRs aren’t even manufactured anymore. It has been replaced by DVD and Blu-ray players, and Netflix streaming. And the staying power of those devices is questionable.
The VCR is by no means the only form of technology to fade into obscurity in recent years. Many major manufacturers of the VCR like Sony, Panasonic, and JVC are still in business today because they didn’t sell just one product. They diversified their business to protect themselves and remain relevant as markets and technology shifted.
Christopher A. Szpryngel, Acting Dean of the Malcolm Baldrige School of Business at Post University, shared his thoughts on the importance of diversification in manufacturing.
Market diversification in manufacturing can be critical, especially if a manufacturing firm has only a handful of large customers. What happens if one manufacturer sends its business elsewhere? For years China has been luring consumers to its manufacturing companies because of low overhead costs which they pass on to their customers. Many US companies cannot compete with the low cost of their materials and products. What happens if a new technology is developed and pulls business away from you? Or if one industry is down, while another is up? If you service the residential construction industry only, what happens during a recession when new home sales typically drop? If you sell lumber to local distributors, how do you offset a decline in lumber purchases?
Some ideas on diversification:
If you sell products to the military, can hospitals, schools, and municipalities benefit from your products as well?
Selling products to the oil industry may be very difficult today, but can the same products — or similar products — benefit the solar industry? Wind power industry?
If you offer to ship in 5-7 days, is there a way to realign current process to get products to the customer in 2-3 days?
Think about Ford Motor Company. Ford pick-ups are the top selling among all pickup trucks in the U.S. In 2016 they are outselling #2 GM’s pickups by nearly 100,000 units. What happens when gas prices begin to rise? Sales of pickups drop very quickly, especially if the prices stay high for extended periods. If Ford only sold pick-ups they could see their revenues decline significantly during these times of high gas prices. But Ford has a diversified product line and also sells less expensive vehicles with excellent gas mileage namely, the Fiesta, Fusion, and Focus models. And if the economy picks up and consumers have more discretionary income, the Mustang model will sell well and Ford’s luxury division Lincoln will also see an increase in sales.
Let’s walk down memory lane and take a look at some very popular — and very outdated — forms of technology, and what has replaced them.