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Case Study: One way companies grow is to launch new businesses into market segments where they have not previously competed. For example, GE, starting with an incandescent lamp business, has moved to businesses covering more than 700 product markets. By all counts, GE's diversification strategies have been successful.
On the other hand, consider the case of McDonald's' diversification strategy of entering the hotel business in Switzerland. In March of 2001, they opened two hotels, and as a result of poor performance, by August 2003 the decision was made to sell the hotels.
Question: Review the video clip about McDonald's Golden Arch Hotel in Zurich, Switzerland and then comment on why you think their diversification strategy failed?
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Tremendously high pay increases were given to the extraordinarily skilled and extremely conscientious employees.
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