Thorn-Emi Strategy

During the early 1980’s, Thorn Emi was one of the largest European companies, operating in approximately 40 countries and exporting to 140 countries around the world ( Kaiser, Aris Stouratis, 2001).

Thorn electrical industry was an electrical engineering business founded by Jules Thorn in March 1928 ti import light bulbs and radio components to the UK as the Electric Lamp Services ltd. After World War two, the company diversified through multiple acquisitions into electronics, electrical appliances, and television-radio rentals, becoming the largest manufacturer of radio and television sets in Britain, and the largest television rental firm in the world (Wikipedia, 2006). When Sir Richard Caves was appointed chairman in 1976, he implemented and continued the strategy of diversification, which resulted in the 1979 acquisition of EMI ltd (Hoovers company profile, 1990). Unlike Thorn the British-based EMI can trace its history back to the end of the 19th century, although the modern company dates from 1931 when it was formed following the a series of mergers between recorded sound and electrical goods company (Hoovers company profile, 1990). During world war two, EMI used its factories to aid the war effort. As a result, the company eventually diversified into sophisticated defence electronic systems (London: Secker& Warburg, 2001). By 1970, it had also acquired film assets. We can make out that the acronym EMI itself spelt “Electrical and Music Industries” already indicated at an early date that this was more than a music-producing firm.

After the merging in October 1979, Thorn-EMI came to be one of the largest operating companies in the UK and in Europe (London: Secker& Warburg, 2001). It was established as a conglomerate, being that it was a combination of two companies that engaged in entirely different businesses, typically through acquisitions and mergers. By early 1984, the company had assets in six major areas which were; music, rentals and retail, lighting, defence electronics, consumer electronics and domestic appliances, and firm interests (The Economist, 1993). Its various components had been responsible for the invention of the stereo recording technique, the development of early radar equipment, the BBC’s first terrestrial television system, the distribution of the Beatles hits, and the production of Oscar-Winning films. Thorn- EMI also sponsored the invention of computed tomography scanning for medical diagnostics (Kaiser, Aris Stouratis, 2001). The CEO Peter Laister at the time announced a strategy to further diversify, mainly in high technology sectors. This decision was followed by the failed attempt to merge with the aviation group British Aerospace, however in 1984 it acquired the microchip manufacturer INMOS. As we are told by the history of the merged conglomerate its management had adopted diversification through acquisition and merging as a form of corporate strategy. Diversification is