What Is Comcast's Diversification Strategy

Diversification Strategies When companies begin they develop a business plan that details what they intend to specialize in. For some, once they have reached a goal in one market they make decisions to venture out into other markets. In the world of business, that venturing out is called diversifying the company. According to Merriam-Webster’s online dictionary, to diversify is “to increase the variety of the products of; or to engage in varied operations.” (Merriam-Webster, 2012) In a business, when you produce a variety of goods or invest in different markets it is a strategy that provides a back-up in the event that one good or investment goes south. Diversification strategies can be either beneficial or harmful to a company.
Comcast Corporation and Eastman Kodak Company are two companies that made the decision to diversify themselves, but it led to different outcomes. Comcast Corporation was originally founded in the early 1960s under the name, American Cable Systems, Inc. Initially, the company only served Tupelo, Mississippi. The company was also one of only a few community antenna television (CATV) services in the nation. The “CATV business was predicated on the fact that rural areas were underserved by commercial television stations which catered to large metropolitan areas.” (Comcast Corporation, 1999) The CATVs used huge antennas that pulled in distant signals to display the shows on television. If a household did not have one of those antennas they had little use for television. Community Antenna Television was not free but its users saw it as a beneficial investment. Under new ownership, American Cable Systems, Inc. began to expand into other areas in Mississippi. This expansion was profitable but the business saw more potential and wanted to branch out further. In 1966, American Cable Systems, Inc.
expanded into areas in Philadelphia. It was this expansion that sparked a new movement for the company. The next state the company began to serve areas in was Florida. The new owner, Ralph Roberts, decided to change the name of the company in 1969. The name was chosen “in an effort to build a more technological identity, he took portions of the words "communication" and "broadcast," creating Comcast Corporation and reincorporating the company in Pennsylvania.” (Comcast Corporation, 1999) From that point the company continued to expand and develop relationships with other companies. In 1983, Comcast Corporation even expanded into the United Kingdom. Today, according to Comcast’s website (2012); Comcast Corporation is one of the world’s leading media, entertainment and communications companies. Comcast is principally involved in the operation of cable systems through Comcast cable and in the development, production and distribution of entertainment, news, sports and other content for global audiences through NBCUniversal. Comcast cable is one of the nation’s largest video, high- speed Internet and phone providers to residential and business customers. Comcast is the majority owner and manager of NBCUniversal, which owns and operates entertainment and news cable networks, the NBC and Telemundo broadcast networks, local television station groups, television production operations, a major motion picture company and theme parks.
(Comcast, 2012)

Eastman Kodak Company was developed in 1880 by George Eastman.
The idea for the company came from Eastman’s desire to make the camera and the materials associated with it easier to transport. He began by manufacturing dry glass plates that he would sell to photographers. For a while the business was shaky. The plates were not always made the same and therefore had to be replaced, a service that Eastman provided for free. Eventually the business began to grow and Eastman continued to work on the company’s product. It was his desire to find a lighter and more flexible substitute for the glass plate. “In 1884 he introduced a new film system using gelatin-coated paper packed in a roll holder that could be used in almost every plate camera available at that time.” (Eastman Kodak Company, 2001) Following that, the company introduced its first portable camera in 1888. The new portable camera has a price point of $25. You could shoot the entire roll of film and afterwards the owner would send both the film and the camera to Rochester for processing. The cost of processing was $10 and it included the developing of the film as well as having the company send back the camera loaded with a new roll of film. “This breakthrough is considered to be the birth of snapshot photography.” (Eastman Kodak Company, 2001) During this time Eastman developed and trademarked the name of the camera, Kodak. He came up with the name by first using his favorite letter “K” and playing with words that both
began and ended with it. (Eastman Kodak Company, 2001) The company continued to prosper and be innovators in the world of cameras and film. It was not until the early 1970s that they began to experience a number of setbacks. They started being sued by other film companies. There were allegations of monopolizing the film industry, as well as other things. Eastman Kodak was beginning to hit hard times. Despite the lawsuits, the company tried to diversify itself by purchasing and investing in different ventures, including pharmaceuticals. Despite the restructuring efforts, Kodak remained, according to Peter Nulty writing in Fortune magazine in early 1994, 'one of the most bureaucratic, wasteful, paternalistic, slow-moving, isolated, and beloved companies in America.' The company continued to lose market share in its core film and photographic paper operations; not only was Kodak reluctant to fully embrace the digital future out of fear of undermining its chemical photography business, it also had been slow to recognize huge opportunities in that chemical core. (Eastman Kodak Company, 2001)

Both Comcast and Kodak started in one direction and decided to explore other avenues. Their ventures saw different outcomes though. Comcast excelled in its new ventures while Kodak seemed to experience a downward spiral. Three primary reasons for the difference in outcomes are: the company’s foundation, the product, and the market. Comcast had a more sound foundation when starting the business while Kodak had a slightly rough start with the defective plates. The products offered by the two companies were very different and had different competitors. The market for the two companies were different as well. A cable provider more than likely had a larger market than a camera company, which means there was more profit to be gained. In order for the diversification of Kodak to have been successful, they should have had a more stable business plan to begin with as well as a developed niche. The decision to diversify a company is a very serious one. It is serious because the wrong decision could be detrimental to the success of the company. A sound business plan and a developed niche could be the ingredients to successfully diversifying a business. In the event that it is a good business decision, the new ventures could bring in great profit. If the outcome does not turn out to be a good decision, the business will have to struggle to get back to the original success it once had. One should do extensive research and use companies like Comcast and Kodak as examples of what you should and should not do.

Reference Page

Comcast Corporation (1999). Retrieved from http://www.fundinguniverse.com/company- histories/Comcast-Corporation-company-History.html
Eastman Kodak Corporation (2001). Retrieved from http://www.fundinguniverse.com/company-histories/Eastman-Kodak-Company- Company-History.html
Corporate Overview (2012). Retrieved from http://www.comcast.com/corporate/about/pressroom/corporateoverview/corporate overview.html?SCRedirect=true
Diversify. (n.d.). In Webster-Merriam online. Retrieved from http://www.merriam- webster.com/dictionary/diversify
History of Kodak (n.d.). Retrieved from http://www.kodak.com/ek/US/en/Our_Company/History_of_Kodak/Imaging- _the_basics.htm