CONGLOMERATE diversification

Strategic decision when an organization adopt a strategy

which requires taking up those activities which are unrelated to the existing business definition of any of its businesses, either in terms of their respective customer groups, customer functions or alternative technologies, IT HAS NO COMMON THREAD AT ALL WITH THE FIRMS PRESENT POSITION

REASONS FOR CONGLOMERATE diversification

Spreading business risks by investing in different industries. Maximizing returns by investing in profitable business. Leveraging competencies in corporate restructuring by turning around loss making companies. Taking advantage of emerging opportunities afforded by an expanding and encouraging government policies.

STRATEGIC examples (INDIAN CONTEXT)

ITC GROUP

: IN AGRIBUSINESS , FMCG, HOTELS , IT SOLUTIONS , PAPERBOARDS..

GODREJ GROUP

:FMCG , FMCD, REALESTATE..

ADITYA BIRLA GROUP

: ALUMINIUM, TELECOM, MINING, CEMENT , COPPER, REALESTATE..

TATA SONS

: IRON & STEEL, AGRI MANAGEMENT, HOTELS, TELECOM, COSULTANCIES..

CONGLOMERATE DIVERSIFICATION a risky proposition

DYNAMICS OF ORGANISATION
1. ORGANISATION STRUCTURE. 2. ORGANISATIONAL CLIMATE. 3. ORGANISATIONAL CULTURE.

LEGAL ASPECTS
1. INDUSTRIAL POLICIES. 2. SOCIO-CULTURAL FACTORS.

CORPORATE IMAGE 1. FIRM AND INDUSTEY . 2. MARKET SHARE. 3. BRAND EQUITY.

OUTCOMES
Hamper overall market image of parent concern. Conglomerate Diversification misbalance organization structure.

Hamper shareholder interest.

Affect the vision, mission and moral values of firm.

Strategic measures to implement

CONGLOMERATE DIVERSIFICATION

IMPLEMENTATION
ORGANISING BRANDING & PROMOTION