Jack of All Trades? Product Diversification in Nonfinancial Firms
Business Review — The announcement of Citicorp’s merger with Travelers Insurance, and much of the accompanying commentary by banking observers and consultants, included many references to cross-marketing opportunities, one-stop shopping, and other potential scope economies — the gains from having a single firm provide different goods or services.
Some skeptics have noted that these scope economies, which seem so plausible, have been difficult to exploit profitably. The diversification strategies of financial firms from Sears to American Express have been notable more for unfulfilled expectations than for high profits.
This article appeared in the May/June 1999 edition of Business Review.
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