CLOSING CASE: page 185 Text book Essentials of Strategic Management” by Hill and Jones, 2nd edition South Western
United Technologies Has an Ace in its pocket
Hartford, Connecticut based United Technologies Corporation (UTC) is a conglomerate that owns companies such as Sikorsky Aircraft Corporation, Pratt & Whitney (maker of aircraft engines), Otis Elevator Company, Carrier air conditioning, and Chubb, the security and lock maker that UTC acquired in 2003. Conglomerates like UTC are typically discounted by the investors, who question whether managers really have the expertise to manage a corporation that has interests in widely different industries. As a result, many erstwhile conglomerates, such as ITT and Greyhound-Dial have been broken up. UTC CEO George David claims that his conglomerate is unique and adds value across UTC’s diverse businesses. He rose up the ranks in UTC’s Otis division, and after he became the CEO, aimed to champion the same kind of quality and efficiency improvements that had transformed Otis into a highly profitable division. These improvements were collectively called Achieving Competitive Excellence, or ACE. ACE’s goal is to find ways to improve quality and reliability, to lower costs of making the product, and especially to find ways to make the next generation of a particular product perform better – in other words, to encourage technological innovation
DISCUSSION ASSIGNMENT
There are 3 parts to this discussion. YOU ARE TO ANSWER THEM INDIVIDUALLY BY NUMBER AND NOT BLEND YOUR ANSWERS Together
1. In what ways does UTC’s corporate-level strategy of unrelated diversification create value? Please reference at least 2 concepts in this Chapter along with page numbers.
2. What are the dangers and disadvantages of this strategy?
3. Collect some recent information on UTC from sources like Wall Street Journal, Hoovers,Yahoo! Finance, etc. How successful has it been in pursuing its strategy? YOU ARE TO CITE at least 2 references here!…be specific