Diversification perhaps? Type Toyota into Google and look at what they are into, Finance, and Agricultural Biology (grand total of 316212 employees according to the Company profile), General Electric has a hand in the following (courtesy of its site), Aircraft Jet Engines, Electricity, Entertainment, Finance, Gas Turbine, Generation, Industrial Automation, Lighting, Medical Imaging Equipment, Medical Software, Motors, Railway Locomotives, Wind Turbines (grand total as of December 2007, 327,00 employees).
Diversification reduces risk, by diversifying your income stream, its common sense unless you have an industry which favours oligopolistic competition or monopoly. And even then companies tend to reach a point in oligopolistic competition where it becomes better to invest into other fields because the return to capital dips down (law of diminishing returns and all that).
If you’ve ever looked at a large company’s corporate structure, you will notice the fact that they have beautiful things ABC Pty Limited Holdings, ABC Limited Holdings, ABC Holdings Limited Pty etc. Why? Because of taxation, actuarial methodology etc, business never makes sense, ever. It might be a perfectly legitimate means of dodging tax, heck if Australia’s corporate legislation doesn’t change into that NES, researching into Stigma would make perfect sense, for every research $ spent you get a 100% tax deduction, you can clean massive sums of money like that all tax free…
It’s not unmanageable to have two totally separate business units, split the board run them through separate holding authorities to limit risk, different classes of shares or what have you. Its pretty common corporate policy…
Vert elect to have it make Gizmo's and Hodat's if you want...
EDIT: @ Chandrasekhar: Sorry.