In the 1950's, how did some corperations expand to protect themselves against the dangers of economic downturns?
In the 1950s, some corporations expanded to protect themselves against the dangers of economic downturns by employing a strategy known as diversification. Diversification involves expanding into different industries or adding new products and services to a company's existing offerings.
Here is how some corporations pursued this expansion strategy:
1. Vertical Integration: Companies pursued vertical integration by acquiring businesses that operated within the same supply chain. For example, oil companies purchased refineries and gas stations to control more aspects of their operations and insulate themselves from fluctuations in the market.
2. Horizontal Expansion: Corporations sought to expand horizontally by acquiring or merging with competitors within the same industry. This allowed them to increase their market share, spread risks, and reduce competition.
3. Conglomerate Expansion: Companies diversified by entering unrelated industries through conglomerate expansion. For instance, a detergent manufacturer might acquire a food processing company to enter the food industry and reduce its dependence on a single market.
4. Geographic Expansion: Some corporations expanded their operations into new geographic regions, either domestically or internationally. This helped them tap into new markets, reduce dependence on a single economy, and mitigate the risks associated with regional downturns.
5. Research and Development: Companies invested heavily in research and development to create new products or improve existing ones. This allowed them to stay ahead of the competition, attract customers even during economic downturns, and diversify their revenue streams.
To protect themselves against economic downturns, corporations in the 1950s sought to broaden their business scope, expand their customer base, and reduce their vulnerability to fluctuations in specific markets or industries.