ble.NEC integrates its computer,
semiconductor, telecommunications, and consumer
electronics businesses by merging computers
and communication.Despite such pitfalls, opportunities to gain advantage
from sharing activities have proliferated because
of momentous developments in technology, deregulation,
and competition.Sharing can lower costs if it achieves economies
of scale, boosts the efficiency of utilization, or helps
a company move more rapidly down the learning
curve.And if compromise greatly erodes the
unit's effectiveness, then sharing may reduce rather
than enhance competitive advantage.The infusion of electronics
and information systems into many industries creates
new opportunities to link businesses.Prime examples of companies that
have diversified via using shared activities include
P&G, Du Pont, and IBM.The costs of General Electric's advertising,
sales, and after-sales service activities in major appliances
are low because they are spread over a wide
range of appliance products.Conversely, diversification
based on the opportunities to share only corporate
overhead is rarely, if ever, appropriate.Sharing activities inevitably involves costs that the
benefits must outweigh.The
shared salesperson, for example, can be provided with
a remote computer terminal to boost productivity
and provide more customer information.Companies
using the shared-activities concept can also
make acquisitions as beachhead landings into a new
industry and then integrate the units through sharing
with other units.Marriott illustrates both successes and failures in
sharing activities over time.A shared service
network, for example, may make more advanced,
remote servicing technology economically feasible.Often, sharing will allow an activity to be wholly
reconfigured in ways that can dramatically raise competitive
advantage.P&G's distribution system is such an instance in the
diaper and paper towel business, where products are
bulky and costly to ship.Companies also merge
activities without consideration of whether they are
sensitive to economies of scale.Companies
compound such errors by not identifying costs of
sharing in advance, when steps can be taken to minimize
them.The fields into which each
has diversified are a cluster of tightly related units.A shared order-processing
system, for instance, may allow new features
and services that a buyer will value.Sharing must involve activities that are significant
to competitive advantage, not just any activity.Costs of compromise can frequently be
mitigated by redesigning the activity for sharing.Internal development is
often possible because the corporation can bring to
bear clear resources in launching a newunit.Sharing can also enhance
the potential for differentiation.Sharing can also
reduce the cost of differentiation.A
salesperson handling the products of two business
units, for example, must operate in a way that is
usually not what either unit would choose were it
independent.Many companies have only superficially identified
their potential for sharing.When they are not,
the coordination costs kill the benefits.Jamming business units together without such thinking exacerbates
the costs of sharing.Start-ups
are less difficult to integrate than acquisitions.One cost is the greater coordination
required to manage a shared activity.The corporate
strategy of sharing can involve both acquisition
and internal development.It is all too easy to create a shallow corporate
theme.More
important is the need to compromise the design or
performance of an activity so that it can be shared.