In what ways does United Technologies corporation's corporate-level strategy of unrelated diversification create value? How successful has it been in pursuing its strategy?
According to Wikipedia (2010) United Technologies Corporation is an American multinational conglomerate based in Hartford, Connecticut; it researches, develops, and manufactures high-technology products in numerous areas, including aircraft engines, helicopters, heating and cooling, fuel cells, elevators and escalators, fire and security, building systems, and industrial products, among others. According to this site, UTC is also a large military contractor, producing missile systems and military helicopters, most notably the UH-60 Black Hawk helicopter; in addition, in 2005, it received $5 billion in military contracts.
According to www.answers.com (2010) although UTC was stung by global recession in the 1990s, UTC has still been successful in a strategy of unrelated diversification (creating value) by embarking on a never ending quest to cut costs, and jobs, much to the displeasure of its unions. According to this site, early in its history, United Aircraft became so successful that it was soon able to purchase other important suppliers and competitors, establishing a strong monopoly. In turn, according to these authors, the group grew to include Boeing, Pratt & Whitney, and Vought, as well as Sikorsky, Stearman, and Northrop (airframes); among others.
According to www.answers.com (2010) the men who led these individual divisions of United Aircraft exchanged stock in their original companies for stock in United. According to these authors, the strong public interest in the larger company drove the value of United Aircraft's stock up in subsequent flotation; the original stockholders ...
This essay describes the ways in which United Technologies Corporations were able to pursue a strategy of unrelated diversification and how successful that strategy has been.