Divesting of businesses can accomplish many different objectives, except

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What Is Corporate Strategy?

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Corporate Strategy

The decisions & actions taken to gain & sustain competitive advantage in several industries and markets simultaneously
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Questions That Executives Ask to Determine Corporate Strategy

What businesses should a corporation compete in?
How can these businesses be managed so they create “synergy” – that is, create more value by working together than if they were freestanding units?
Business-level strategy = how to compete in a given industry,

Walmart, Target – incorporate grocery stores, business level strategy of differentiation or corporate-level?
“where to compete” so corporate rather than “how to compete”, which would be business level
Corporate-level strategy = a strategy that focuses on gaining long-term revenue, profits, and market value through managing operations in multiple businesses. Determining how to create value through entering new markets, introducing new products, or developing new technologies is a vital issue in strategic management, but maintaining a focus on “creating value” is essential to long-term success.

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Why Firms Need to Grow

Increase profits
Lower costs
Increase market power
Reduce risk
Motivate management
Competition & Fairness – TED talk

Increase profits – results in shareholder returns

Lower costs – growth enables efficiency

Increase market power – fewer competitors, more bargaining power, higher profitability

Reduce risk – low performance in one SBU can be compensated by another

Motivate management – job security

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Three Dimensions of Corporate Strategy

Core Competencies – embedded deep in a firm
Google’s core competency is developing search algorithms
Economies of Scale
Spread fixed costs, e.g. Beer manufacturer, multiple brands
Economies of Scope
Leverages resources & technology, e.g., Amazon
Transaction Costs
Determine whether it is cost effective to:
Vertically integrate
Diversify
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Transaction Costs

Costs associated with an economic exchange
Can be within or external to a firm
External transaction costs
Searching for a firm individual to contract with
Negotiating, monitoring, and enforcing the contract
Internal transaction costs
Recruiting and retaining employees
Paying salaries and benefits
Setting up a shop floor
Providing office space and computers, etc.
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Vertical (& Horizontal Integration)

https://www.youtube.com/watch?v=X4G4yUYqEVU
Industry value chain runs vertically – upstream to downstream
Firm-level value chain runs horizontally
Rockefller’s mission was to be the best illuminator in the world at the lowest price. Captured 90% of oil refining business; pushed price down from .58 to .08.

engaged in unethical practices, such as predatory pricing and colluding with railroads, who transported his products in order to gain a monopoly.

Discussion Question 1: What are the pros and cons of Coca-Cola owning its bottlers?

Pros

Raised barrier to entry

Greater control over brand and image

Consistent, nationally scaled distribution network

Cons

Capital expenditures

Reduced coke’s flexibility to meet changing market conditions or consumer’s changing tastes/demands

Diverted focus from customer needs

Didn’t have the skills

soft-drink market is in the late mature phase of the life cycle.
very competitive market with limited growth and stagnant to slightly declining profit margins.
bottling end of the business is an especially low margin business
only be successful if, by freeing up both capital and management attention, it is able to improve its market flexibility to respond to its changing market and take actions that will reinvigorate market growth for the firm
*

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Types of Vertical Integration

Backward Vertical Integration
Moving ownership of activities upstream to the originating inputs of the value chain
Forward Vertical Integration
Moving ownership of activities closer to the end customer
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Firms Vs. Markets: Make Or Buy?

If Cin-house < Cmarket, vertically integrate
Own production of the inputs or
Own output distribution channels
When firms are more efficient than the market, vertically integrate
Example: Oracle (competency: enterprise software)
Backward integration: Sun Microsystems (hardware)
Forward integration: HRMS, CRM systems (PeopleSoft)
Instructors:

The digital companion to this book McGraw-Hill Connect has a video case exercise on this section of the textbook. It builds student confidence on the scope of the firm particularly as it relates to governmental bodies (LO 8-3).

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Forward and Backward Integration:
The Smartphone Industry

Jump to Appendix 6 long image description

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Alternatives on the Make-or-buy Continuum

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Benefits of Vertical Integration

Lowers costs
Improves quality
Facilitates scheduling and planning
Facilitates investments in specialized assets
Reference the next slide for more information
Secures critical supplies and distribution channels
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Risks of Vertical Integration

Increase in costs
Reduction in quality
Reduction in flexibility
Increase in the potential for legal repercussions
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When Does Vertical Integration Make Sense?

When there are shortages of raw materials
To enhance the customer’s experience
To improve quality of the value provided by suppliers
To increase profits
Does company have necessary competencies
Potential positive impacts on firm’s stakeholders
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Tapering Integration

An alternative to vertical integration
Involves either:
Backward integration & relying on others for supplies
Forward integration & relying on others for distribution
Jump to Appendix 7 long image description

Both Apple and Nike, for example, use taper integration: They own retail outlets but also use other retailers, both the brick-and-mortar type and online.

Allows flexibility as demand changes

Improves innovation

Retain (& fine-tune competencies upstream/downstream

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Strategic Outsourcing

Moving one or more internal value chain activities outside the firm’s boundaries to other firms in the industry value chain
Example: Off-shoring
Most active sectors of off-shoring:
Banking & financial services
IT
Health Care
Humorous personal outsourcing video
Human Resources

If a firm has a core value of respecting its employees and rewarding top performance with training, raises, and promotions, does outsourcing HR management show a lack of commitment by the firm? HR management systems are software applications that typically manage payroll, benefits, hiring and training, and performance appraisal. What are the advantages and disadvantages of this decision?

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Making Diversification Work

Diversification initiatives must create value for shareholders through

Mergers and acquisitions

Strategic alliances

Joint ventures

Internal development

Diversification should create synergy.

Business 1 plus Business 2 equals More than two.

Diversification = the process of firms expanding their operations by entering new businesses. Diversification initiatives – whether through mergers and acquisitions, strategic alliances and joint ventures, or internal development – must be justified by the creation of value for shareholders. But this is not always the case. Firms typically pay high premiums when they acquire a target firm. So why should companies even bother with diversification initiatives? The answer is synergy, which means “working together,” and synergistic effects should be multiplicative – one plus one should equal more than two.

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Leveraging Core Competencies
For Corporate Diversification

Jump to Appendix 8 long image description

SOURCE: Adapted from G. Hamel and C.K. Prahalad (1994), Competing for the Future (Boston, MA: Harvard Business School Press).

This image shows a guide for managerial decisions in regard to diversification strategies. The first task for managers is to identify their existing core competencies and understand the firm’s current market situation. When applying an existing or new dimension to core competencies and markets, four quadrants emerge, each with distinct strategic implications.

The lower-left quadrant combines existing core competencies with existing markets. Here, managers must come up with ideas of how to leverage existing core competencies to improve the firm’s current market position.

The lower-right quadrant combines existing core competencies with new market opportunities. Here, managers must strategize about how to redeploy and recombine existing core competencies to compete in future markets.

The upper-left quadrant combines new core competencies with existing market opportunities. Here, managers must come up with strategic initiatives to build new core competencies to protect and extend the company’s current market position.

Finally, the upper-right quadrant combines new core competencies with new market op-portunities. Hamel and Prahalad call this combination “mega- opportunities”—those that hold significant future-growth opportunities.

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©McGraw-Hill Education.

Making Diversification Work

A firm may diversify into related businesses.

Benefits derive from horizontal relationships.

Sharing intangible resources such as core competencies in marketing

Sharing tangible resources such as production facilities, distribution channels via vertical integration

A firm may diversify into unrelated businesses.

Benefits derive from hierarchical relationships.

Value creation derived from the corporate office

Leveraging support activities in the value chain

Related businesses are those that share resources. Unrelated businesses have few similarities in products or industries, however the corporate office can add value through such activities as robust information systems or superb human resource practices. Benefits derived from horizontal (related diversification) and hierarchical (unrelated diversification) relationships are not mutually exclusive. Many firms that diversify into related areas benefit from information technology expertise in the corporate office. Similarly, unrelated diversifiers often benefit from the “best practices” of sister businesses even though their products, markets, and technologies may differ dramatically. An example would be a corporate parent with strong support activities in the value chain such as information systems or human resource practices.

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Related Diversification

Related diversification enables a firm to benefit from horizontal relationships across different businesses.

Economies of scope allow businesses to:

Leverage core competencies

Share related activities

Enjoy greater revenues, enhance differentiation

Related businesses gain market power by:

Pooled negotiating power

Vertical integration

Core competencies = a firm’s strategic resources that reflect the collective learning in the organization, create superior customer value, are difficult for competitors to imitate or find substitutes for.

Sharing activities = cost savings through elimination of jobs, facilities & related expenses or economies of scale

Differentiation - enhance the effectiveness of their differentiation strategies by means of sharing activities among business units. A shared order-processing system, for example, may permit new features and services that a buyer will value.

Market power = firms’ abilities to profit through restricting or controlling supply to a market or coordinating with other firms to reduce investment.

Pooled negotiation power = the improvement in bargaining position relative to suppliers and customers. Be careful, though: acquiring related businesses can enhance a corporation’s bargaining power, but it must be aware of the potential for retaliation.

Vertical integration = an expansion or extension of the firm by integrating preceding or successive production processes. Vertical integration occurs when a firm becomes its own supplier or distributor.

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Question

Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that

the similarity required for sharing core competencies must be in the value chain, not in the product.

the products use similar distribution channels.

the target market is the same, even if the products are very different.

the methods of production are the same.

Answer: A. See the discussion of core competencies and the criteria for success.

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Question

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of

leveraging core competencies.

pooled negotiating power.

vertical integration.

sharing activities.

Answer: C. See Exhibit 6.3. See the Shaw Industries website at http://shawfloors.com/

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Unrelated Diversification

Unrelated diversification enables a firm to benefit from vertical or hierarchical relationships between the corporate office & individual business units through…

The corporate parenting advantage

Providing competent central functions, IT, leadership/culture, business practices

Restructuring to redistribute assets

Asset, capital, & management restructuring

Portfolio management

BCG growth/share matrix

Parenting advantage = the positive contributions of the corporate office to a new business as a result of expertise and support provided, and not as a result of substantial changes in assets, capital structure, or management. Restructuring = the intervention of the corporate office in a new business that substantially changes the

assets,

capital structure, and/or

management, including selling off parts of the business, changing the management, reducing payroll and unnecessary sources of expenses, changing strategies, and infusing the new business with new technologies, processes, and reward systems.

Portfolio management = a method of (a) assessing the competitive position of a portfolio of businesses within a corporation, (b) suggesting strategic alternatives for each business, and (c) identifying priorities for the allocation of resources across the businesses.

businesses whose profitability, growth, and cash flow characteristics would complement each other, and add up to satisfactory overall corporate performance.

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Boston Consulting Group (BCG)
Growth-share Matrix

Jump to Appendix 11 long image description

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Vertical Integration and Diversification: Sources of Value Creation and Costs

Jump to Appendix 10 long image description

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Means of Diversification

Diversification can be accomplished via

Mergers & acquisitions

And divestment

Pooling resources of other companies with a firm’s own resource base through

Strategic alliances & joint ventures

Internal Development through

Corporate entrepreneurship

New venture development

Diversification, either related or unrelated, allows a firm to achieve synergies and create value for its shareholders. There are three basic means by which a firm can diversify. Mergers = the combining of two or more firms into one new legal entity. Acquisitions = the incorporation of one firm into another through purchase. Through mergers and acquisitions, corporations can directly acquire another firm’s assets and competencies. A firm can also divest previous acquisitions. Divestment = the exit of a business from the firm’s portfolio. By using a joint venture or strategic alliance, corporations can pool the resources of other companies with their own resource base. Strategic alliance = a cooperative relationship between two or more firms. Joint ventures = new entities formed within a strategic alliance in which two or more firms, the parents, contribute equity to form the new legal entity. Finally, corporations may diversify into new products, markets, and technologies through internal development. Internal development = entering a new business through investment in new facilities, often called corporate entrepreneurship and new venture development. Corporate entrepreneurship involves the leveraging and combining of the firm’s own resources and competencies to create synergies and enhance shareholder value.

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Mergers and Acquisitions: Limitations

Takeover premiums for acquisitions are typically very high.

Competing firms can imitate advantages.

Competing firms can copy synergies.

Managers’ egos get in the way of sound business decisions

Cultural issues may doom the intended benefits.

Mergers:

Can lead to consolidation within an industry or
allow corporations to enter new markets
By estimates, 70 to 90% of acquisitions destroy shareholder value.

Stock price of the acquiring company falls once the deal is made public.

Acquiring firm often pays a 30% or higher premium for the target company, the acquirer must create synergies and scale economies that result in sales and market gains exceeding the premium price.

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Mergers and Acquisitions:
Divestment Objectives

Divestment objectives include:

Cutting the financial losses of a failed acquisition

Redirecting focus on the firm’s core businesses

Freeing up resources to spend on more attractive alternatives

Raising cash to help fund existing businesses

Divestments, the exit of the business from the firm’s portfolio, are quite common. Large, prestigious U.S. companies may have divested more acquisitions than they have kept. Investing can enhance a firm’s competitive position only to the extent that it reduces its tangible (e.g., maintenance, investments, etc.) or intangible (e.g., opportunity costs, managerial attention) costs without sacrificing a current competitive advantage or the seeds of future advantages. To be effective, divesting requires a thorough understanding of the business unit’s current ability and future potential to contribute to a firm’s value creation. Modes of divestment include sell-offs, spin-offs, equity carve-outs, asset sales/dissolution, and split-ups.

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©McGraw-Hill Education.

Question

Divestment can be the common result of an acquisition. Divesting businesses can accomplish many different objectives. These include

enabling managers to focus their efforts more directly on the firm’s core businesses.

providing the firm with more resources to spend on more attractive alternatives.

raising cash to help fund existing businesses.

all of the above.

Answer: D. Divestment = the exit of a business from the firm’s portfolio. See limitations of mergers and acquisitions, and how divesting a business can accomplish many different objectives, as on the next slide.

.

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Strategic Alliances &
Joint Ventures: Limitations

Need for the proper partner:

Partners should have complementary strengths.

Partner’s strengths should be unique.

Uniqueness should create synergies.

Synergies should be easily sustained & defended.

Partners must be compatible & willing to trust each other.

Despite their promise, many alliances and joint ventures fail to meet expectations for a variety of reasons. The proper partner is essential. However, unfortunately, often little attention is given to nurturing the close working relationship and interpersonal connections that bring together the partnering organizations.

Ability to enter new markets through

Greater financial resources

Greater marketing expertise

Ability to reduce manufacturing or other costs in the value chain

Ability to develop & diffuse new technologies

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Executives Make Important Choices Along Three Dimensions

Degree of vertical integration: the stages of the industry value chain to participate in
Type of diversification: the range of products and services to offer
The geographic scope: where to compete
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©McGraw-Hill Education.

Exercise

Agriculture: one of the largest / oldest industries in the world
They often struggle for profit.
Some are turning to tourism.
Complimentary revenue source
Fair Oaks Farms
Dairy farm in Indiana
Home to 30,000 cows
Initiated several attractions: play area, cheese area, cow viewing
Hosts 500,000 tourists / year
What other industrial or commercial industries could benefit from such potential tourist or recreational revenues? Discuss what new and complementary capabilities would need to be developed in order to succeed.

As the number of assembly and manufacturing locations decreases within industrialized nations, those remaining have increasing possibilities to add tours and souvenir shops and other consumer-focused educational activities. Traditionally, automotive and aircraft plants have opened at least several times a year for such tours. In the 21st century, there are opportunities to allow tours of computer “server farms” to give Internet users a sense for what it takes to keep the Internet running so reliably and speedily.

In your group, list other industry combinations you have seen be successful. Consider why you think the combination has been a success.

Students will likely have many examples from their own experience or knowledge. Here are two examples to get the conversation going… In Louisville Kentucky, a Louisville Slugger baseball bat factory opened right along a major tourist road downtown. They give tours, have games for the kids, and sell bats and other baseball-related items. In Vacaville, California, a Jelly Belly factory routinely has an hour wait for the factory tour (and free jelly bean samples at the end). They run the guided tour with photos at the workstations when the factory processes are closed or otherwise not running.

*

©McGraw-Hill Education.

Trying Strategy Pieces Together

https://www.youtube.com/watch?v=ACEXc8acZ-U
*

*

Business-level strategy = how to compete in a given industry,

Walmart, Target – incorporate grocery stores, business level strategy of differentiation or corporate-level?
“where to compete” so corporate rather than “how to compete”, which would be business level
Corporate-level strategy = a strategy that focuses on gaining long-term revenue, profits, and market value through managing operations in multiple businesses. Determining how to create value through entering new markets, introducing new products, or developing new technologies is a vital issue in strategic management, but maintaining a focus on “creating value” is essential to long-term success.

*

Increase profits – results in shareholder returns

Lower costs – growth enables efficiency

Increase market power – fewer competitors, more bargaining power, higher profitability

Reduce risk – low performance in one SBU can be compensated by another

Motivate management – job security

*

*

*

Rockefller’s mission was to be the best illuminator in the world at the lowest price. Captured 90% of oil refining business; pushed price down from .58 to .08.

engaged in unethical practices, such as predatory pricing and colluding with railroads, who transported his products in order to gain a monopoly.

Discussion Question 1: What are the pros and cons of Coca-Cola owning its bottlers?

Pros

Raised barrier to entry

Greater control over brand and image

Consistent, nationally scaled distribution network

Cons

Capital expenditures

Reduced coke’s flexibility to meet changing market conditions or consumer’s changing tastes/demands

Diverted focus from customer needs

Didn’t have the skills

soft-drink market is in the late mature phase of the life cycle.
very competitive market with limited growth and stagnant to slightly declining profit margins.
bottling end of the business is an especially low margin business
only be successful if, by freeing up both capital and management attention, it is able to improve its market flexibility to respond to its changing market and take actions that will reinvigorate market growth for the firm
*

*

Instructors:

The digital companion to this book McGraw-Hill Connect has a video case exercise on this section of the textbook. It builds student confidence on the scope of the firm particularly as it relates to governmental bodies (LO 8-3).

*

*

*

*

*

*

Both Apple and Nike, for example, use taper integration: They own retail outlets but also use other retailers, both the brick-and-mortar type and online.

Allows flexibility as demand changes

Improves innovation

Retain (& fine-tune competencies upstream/downstream

*

Human Resources

If a firm has a core value of respecting its employees and rewarding top performance with training, raises, and promotions, does outsourcing HR management show a lack of commitment by the firm? HR management systems are software applications that typically manage payroll, benefits, hiring and training, and performance appraisal. What are the advantages and disadvantages of this decision?

*

Diversification = the process of firms expanding their operations by entering new businesses. Diversification initiatives – whether through mergers and acquisitions, strategic alliances and joint ventures, or internal development – must be justified by the creation of value for shareholders. But this is not always the case. Firms typically pay high premiums when they acquire a target firm. So why should companies even bother with diversification initiatives? The answer is synergy, which means “working together,” and synergistic effects should be multiplicative – one plus one should equal more than two.

*

This image shows a guide for managerial decisions in regard to diversification strategies. The first task for managers is to identify their existing core competencies and understand the firm’s current market situation. When applying an existing or new dimension to core competencies and markets, four quadrants emerge, each with distinct strategic implications.

The lower-left quadrant combines existing core competencies with existing markets. Here, managers must come up with ideas of how to leverage existing core competencies to improve the firm’s current market position.

The lower-right quadrant combines existing core competencies with new market opportunities. Here, managers must strategize about how to redeploy and recombine existing core competencies to compete in future markets.

The upper-left quadrant combines new core competencies with existing market opportunities. Here, managers must come up with strategic initiatives to build new core competencies to protect and extend the company’s current market position.

Finally, the upper-right quadrant combines new core competencies with new market op-portunities. Hamel and Prahalad call this combination “mega- opportunities”—those that hold significant future-growth opportunities.

*

Related businesses are those that share resources. Unrelated businesses have few similarities in products or industries, however the corporate office can add value through such activities as robust information systems or superb human resource practices. Benefits derived from horizontal (related diversification) and hierarchical (unrelated diversification) relationships are not mutually exclusive. Many firms that diversify into related areas benefit from information technology expertise in the corporate office. Similarly, unrelated diversifiers often benefit from the “best practices” of sister businesses even though their products, markets, and technologies may differ dramatically. An example would be a corporate parent with strong support activities in the value chain such as information systems or human resource practices.

*

Core competencies = a firm’s strategic resources that reflect the collective learning in the organization, create superior customer value, are difficult for competitors to imitate or find substitutes for.

Sharing activities = cost savings through elimination of jobs, facilities & related expenses or economies of scale

Differentiation - enhance the effectiveness of their differentiation strategies by means of sharing activities among business units. A shared order-processing system, for example, may permit new features and services that a buyer will value.

Market power = firms’ abilities to profit through restricting or controlling supply to a market or coordinating with other firms to reduce investment.

Pooled negotiation power = the improvement in bargaining position relative to suppliers and customers. Be careful, though: acquiring related businesses can enhance a corporation’s bargaining power, but it must be aware of the potential for retaliation.

Vertical integration = an expansion or extension of the firm by integrating preceding or successive production processes. Vertical integration occurs when a firm becomes its own supplier or distributor.

*

Answer: A. See the discussion of core competencies and the criteria for success.

*

Answer: C. See Exhibit 6.3. See the Shaw Industries website at http://shawfloors.com/

*

Parenting advantage = the positive contributions of the corporate office to a new business as a result of expertise and support provided, and not as a result of substantial changes in assets, capital structure, or management. Restructuring = the intervention of the corporate office in a new business that substantially changes the

assets,

capital structure, and/or

management, including selling off parts of the business, changing the management, reducing payroll and unnecessary sources of expenses, changing strategies, and infusing the new business with new technologies, processes, and reward systems.

Portfolio management = a method of (a) assessing the competitive position of a portfolio of businesses within a corporation, (b) suggesting strategic alternatives for each business, and (c) identifying priorities for the allocation of resources across the businesses.

businesses whose profitability, growth, and cash flow characteristics would complement each other, and add up to satisfactory overall corporate performance.

*

*

*

Diversification, either related or unrelated, allows a firm to achieve synergies and create value for its shareholders. There are three basic means by which a firm can diversify. Mergers = the combining of two or more firms into one new legal entity. Acquisitions = the incorporation of one firm into another through purchase. Through mergers and acquisitions, corporations can directly acquire another firm’s assets and competencies. A firm can also divest previous acquisitions. Divestment = the exit of a business from the firm’s portfolio. By using a joint venture or strategic alliance, corporations can pool the resources of other companies with their own resource base. Strategic alliance = a cooperative relationship between two or more firms. Joint ventures = new entities formed within a strategic alliance in which two or more firms, the parents, contribute equity to form the new legal entity. Finally, corporations may diversify into new products, markets, and technologies through internal development. Internal development = entering a new business through investment in new facilities, often called corporate entrepreneurship and new venture development. Corporate entrepreneurship involves the leveraging and combining of the firm’s own resources and competencies to create synergies and enhance shareholder value.

*

Mergers:

Can lead to consolidation within an industry or
allow corporations to enter new markets
By estimates, 70 to 90% of acquisitions destroy shareholder value.

Stock price of the acquiring company falls once the deal is made public.

Acquiring firm often pays a 30% or higher premium for the target company, the acquirer must create synergies and scale economies that result in sales and market gains exceeding the premium price.

*

Divestments, the exit of the business from the firm’s portfolio, are quite common. Large, prestigious U.S. companies may have divested more acquisitions than they have kept. Investing can enhance a firm’s competitive position only to the extent that it reduces its tangible (e.g., maintenance, investments, etc.) or intangible (e.g., opportunity costs, managerial attention) costs without sacrificing a current competitive advantage or the seeds of future advantages. To be effective, divesting requires a thorough understanding of the business unit’s current ability and future potential to contribute to a firm’s value creation. Modes of divestment include sell-offs, spin-offs, equity carve-outs, asset sales/dissolution, and split-ups.

*

Answer: D. Divestment = the exit of a business from the firm’s portfolio. See limitations of mergers and acquisitions, and how divesting a business can accomplish many different objectives, as on the next slide.

.

*

Despite their promise, many alliances and joint ventures fail to meet expectations for a variety of reasons. The proper partner is essential. However, unfortunately, often little attention is given to nurturing the close working relationship and interpersonal connections that bring together the partnering organizations.

Ability to enter new markets through

Greater financial resources

Greater marketing expertise

Ability to reduce manufacturing or other costs in the value chain

Ability to develop & diffuse new technologies

*

*

What other industrial or commercial industries could benefit from such potential tourist or recreational revenues? Discuss what new and complementary capabilities would need to be developed in order to succeed.

As the number of assembly and manufacturing locations decreases within industrialized nations, those remaining have increasing possibilities to add tours and souvenir shops and other consumer-focused educational activities. Traditionally, automotive and aircraft plants have opened at least several times a year for such tours. In the 21st century, there are opportunities to allow tours of computer “server farms” to give Internet users a sense for what it takes to keep the Internet running so reliably and speedily.

In your group, list other industry combinations you have seen be successful. Consider why you think the combination has been a success.

Students will likely have many examples from their own experience or knowledge. Here are two examples to get the conversation going… In Louisville Kentucky, a Louisville Slugger baseball bat factory opened right along a major tourist road downtown. They give tours, have games for the kids, and sell bats and other baseball-related items. In Vacaville, California, a Jelly Belly factory routinely has an hour wait for the factory tour (and free jelly bean samples at the end). They run the guided tour with photos at the workstations when the factory processes are closed or otherwise not running.

*