Production and Operations Management

In this paper we will take a look at how diversification of a company’s product or service affects their business. Diversification is a company strategy wherein a company tries to increase profitability through increased sales volume from new products and new markets (Diversification Strategy, 2010). Companies employ different diversification strategies to expand firms' operations by adding markets, products, services, or stages of production to the existing business (Diversification Strategy, 2010). During the course of this paper we will also uncover the tools and strategies that are needed to successfully diversify a company’s core product lineup. The two companies we will be comparing are Hallmark Cards Inc. and Northrop Grumman. We will start by reviewing the company profile of Hallmark Card Inc. and see how diversification of their product lineup has affected their business.

Hallmark Card Inc.

Profit Stability is important to any organizations success, perhaps no industry is more vulnerable to this than manufacturers of greeting cards (Why do firms Diversify, nd). The founder of Hallmark Card Inc. really understood this concept and developed a plan to have continuous profits regardless of the time of year. Hallmark Cards, Inc. and its Ambassador subsidiary have a 44% share of the greeting card market, employ twenty five thousand people and earn 4.3 billion in sales annual, they have established themselves as leaders in their industry. (Klaus, Krista 18 March 2011). Hallmark has worked hard to extend its product lines. As early as 1928, the company was dominating the US greeting card market and had invented gift wrap, introducing it when they ran out of their traditional colored tissue wrapping paper (Admin). In 1936, the company produced the case display for their cards, while the first greeting card store followed in 1950 (Admin). A year later came the Hallmark Hall of Fame television production (Admin). Hallmark did an excellent job of relating to their customer base by attacking the emotional attachment that their product provides for their customers. By allowing their product to cross over to other avenues it allowed them to become successful at introducing other components of their company. Today, Hallmark is a fully diversified international company that counts the Hallmark Channel, Crayola and Hallmark Music among its subsidiaries (Admin). With year-round trade stronger than ever, the company's motto of "We're with you at holidays and any-days" is a fitting reminder that diversification can take a niche firm and turn it in to a major player. (Admin) In summary, Hallmark took their core business of greeting cards and created a controlled diversification process that allowed all of their business ventures to revolve around one key component.

Northrop Grumman

Northrop Grumman is a leading global security company providing