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Anastasy [175]
4 years ago
6

Coca-Cola acquired its bottlers and created a national vertically integrated business operation in 2010. After spending 12.3 bil

lion USD to acquire Coca-Cola Enterprises, its largest bottling partner, it reversed course in 2015 and sold off all its bottling operations. This is an example of a failed diversification effort.
Business
1 answer:
KiRa [710]4 years ago
8 0

Coca-Cola acquired its bottlers and created a national vertically integrated business operation in 2010. After spending 12.3 billion USD to acquire Coca-Cola Enterprises, its largest bottling partner, it reversed course in 2015 and sold off all its bottling operations. This is an example of a <u>failed diversification effort</u>.

<u>Explanation</u>:

Diversification efforts are taken by the organizations to achieve desired outcomes but sometimes they fail in it. The following are the reason for failure of diversification effort:

- failing to integrate acquisitions

- unable to understand how the acquired organization’s assets would fit with their own lines of business

- paying high premium for the target's common stock

- not acting in best interest of shareholders

The diversification strategy is adopted by many organizations to develop its business. In the above scenario, Coca-Cola Enterprises adopted diversification effort but failed in it.

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