1. Was the 1984 acquisition of the small household appliance business from GE a related or unrelated diversification? Defend your position. What motivated that acquisition? Was the 1989 acquisition of Emhart Corporation a related or unrelated diversification? Defend your position. What motivated that acquisition?
The acquisition of the small household appliance business from GE is a related diversification. Because before this acquisition, B&D was the world’s famous power tools manufacturers, and after B&D acquired the small household appliance division from GE, B&D was able to expand and transform into a consumer products company. Most importantly, the raw materials, the manufacturing process, and the assembly process for producing power tools and small house-hold appliances all bear similarities to some extent, therefore, B&D could create related diversification by using its capabilities and resources into other settings. The motivation behind this acquisition is the extra clout that being able to offer retailers a full line of housewares would have in competing for shelf space.
The acquisition of Emhart Corporation is an unrelated diversification. Emhart was a diversified manufacturer of industrial products, information and electronic systems, and consumer products. Emhart’s business and product categories were broader than B&D’s, and included many categories that B&D did not have. Although Emhart had some businesses that seemed to fit with those of B&D, it had other businesses, such as the manufacturer of golf-club shafts and glass-making equipment, where potential synergies were even less likely. The motivation behind this acquisition is that for B&D, whose main businesses were power tools and household appliances, the move represented an enormous step in its strategy to diversify into related but less cyclical businesses. If