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core business and diversified business

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  • Businee Economy

    2. 2. Core Business Vs Diversified Business <ul><li>Robin Kapoor 47 </li></ul><ul><li>Sourabh Garg 60 </li></ul><ul><li>Deepak Kumar 13 </li></ul><ul><li>Yogendra Dwivedi 72 </li></ul><ul><li>Vikas Sharma 69 </li></ul><ul><li>Tushar Garg 63 </li></ul><ul><li>Prateek Nahar 34 </li></ul><ul><li>Pankaj Jain 29 </li></ul>
    3. 3. Core Business <ul><li>The core business of an organization is an idealized construct intended to express that organization's &quot;main&quot; or &quot;essential&quot; activity </li></ul><ul><li>The central, and usually the original, focus of an organization's activities that differentiates it from others and makes a vital contribution to its success </li></ul><ul><li>The concept of core business became prominent in the 1980s </li></ul><ul><li>In 1982, Tom Peters's and Robert Waterman's book In Search of Excellence suggested that organizations should stick to the knitting and avoid diversifying into areas beyond their field of expertise. </li></ul>
    4. 4. Pros and Cons of core business <ul><li>Advantages </li></ul><ul><li>Focus is defined. </li></ul><ul><li>Clear identity. </li></ul><ul><li>Bring innovations in their respective fields. </li></ul><ul><li>Disadvantages </li></ul><ul><li>risk </li></ul>
    5. 5. Examples of Core business
    6. 6. Maruti Udyog Ltd. <ul><li>Incorporated-February 1981 </li></ul><ul><li>Joint Venture-October 1982 </li></ul><ul><li>Facilities - Gurgaon: 3 vehicle assembly plants Manesar: 1 vehicle assembly plant Head Office in New Delhi, India Regional offices: 16 </li></ul><ul><li>Employees-4993 of Financial year 2006-07 </li></ul><ul><li>Maruti assembles different models of cars for different segments. </li></ul>
    7. 7. 11 Models of Maruti
    8. 8. Infosys <ul><li>Infosys Technologies Ltd. (NASDAQ: INFY) was started in 1981 by seven people with US$ 250. </li></ul><ul><li>Today, we are a global leader in the &quot;next generation&quot; of IT and consulting with revenues of over US$ 3 billion. </li></ul><ul><li>Infosys defines, designs and delivers technology-enabled business solutions that help companies globally. </li></ul>
    9. 9. Infosys Continued….. <ul><li>Infosys also provides a complete range of services by leveraging our domain and business expertise and strategic alliances with leading technology providers. </li></ul><ul><li>Infosys takes pride in building strategic long-term client relationships. Over 95% of our revenues come from existing customers. </li></ul>
    10. 10. Arcelor Mittal <ul><li>The world's number one steel company, with 310,000 employees in more than 60 countries. </li></ul><ul><li>Revenues of US$ 105.2 billion, with a crude steel production of 116 million tonnes. </li></ul>
    11. 11. Products and Services of Arcelor Mittal <ul><li>Tubular services </li></ul><ul><li>Stainless steel </li></ul><ul><li>Wire </li></ul><ul><li>Automotive </li></ul><ul><li>Construction Material </li></ul><ul><li>Distribution </li></ul><ul><li>Steel Services Centers </li></ul>
    12. 12. Domino’s <ul><li>Domino's Pizza India Ltd . was incorporated in March 1995 as the master franchisee for India and Nepal, of Domino's Pizza International Inc., of USA. </li></ul><ul><li>Domino's Pizza India Ltd. has proceeded to become one of the largest and fastest growing international food chains in South Asia. </li></ul><ul><li>First Domino's Pizza store in India opened in January 1996, at New Delhi. </li></ul><ul><li>Presently over 165 outlets in 33 cities and is the leader in the fast food delivery segment. </li></ul><ul><li>Customers can order their pizzas by calling a single countrywide Hunger Helpline - 1800-111-123. </li></ul>
    13. 13. Dominos continued.. <ul><li>Domino's vision is focused on &quot; Exceptional people on a mission to be the best pizza delivery company in the world! &quot;. </li></ul><ul><li>Domino's is committed to bringing fun and excitement to the lives of our customers by delivering delicious pizzas to their doorstep in 30 minutes or less. </li></ul><ul><li>Domino's believes strongly in the strategy of 'Think local and act regional' that is subtly blended with a playful images personified by its ' Hungry Kya? ' positioning. </li></ul><ul><li>Time and again Domino's has been innovating toppings suitable to the taste buds of the local populace and these have been very well accepted by the Indian market.    </li></ul>
    14. 14. Diversified Business
    15. 15. Meaning <ul><li>Business that operates in more than one industry or market, and uses different distribution channels as a matter of corporate strategy. </li></ul><ul><li>A company may attempt to manufacture the products itself, or it may acquire or merge with an ongoing organization. </li></ul>
    16. 16. Diversified Business <ul><li>Why Diversification? </li></ul><ul><li>The two principal objectives of diversification are </li></ul><ul><li>improving core process execution, and/or </li></ul><ul><li>enhancing a business unit's structural position </li></ul><ul><li>Forms and Means of Diversification </li></ul><ul><li>Diversification typically takes one of three forms: </li></ul><ul><li>Vertical integration - along your value chain </li></ul><ul><li>Horizontal diversification - moving into new industry </li></ul><ul><li>Geographical diversification - to open up new markets </li></ul>
    17. 17. History of diversification <ul><li>Diversification strategies play a major role in the behaviour of large firms. A sequence of diversification followed by restructuring has been common in countries such as Australia, USA, UK and Germany </li></ul><ul><li>In the Fortune 500 US industrial companies, the proportion that generated more than 25% of their revenues from diversified activities increased during the 1950s, 1960s and early 1970s, but then fell off again during the 1980s </li></ul><ul><ul><li>Fortune 500 companies with >25% revenues from diversified activities </li></ul></ul><ul><ul><ul><li>1950 38% </li></ul></ul></ul><ul><ul><ul><li>1974 63% </li></ul></ul></ul><ul><ul><ul><li>1988 47% </li></ul></ul></ul>
    18. 18. Firms Vary by Degree of Diversification A Eg DLF Eg UB Eg Hero Group Eg Tata Group Single-business > 95% of revenues from a single business unit Low Levels of Diversification Dominant-business Between 70% & 95% of revenues from a single business unit B A Unrelated-Diversified Business units not closely related High Levels of Diversification A B C Moderate to High Levels of Diversification < 70% of revenues from dominant business; technological & distribution links Related constrained Related linked (mixed) < 70% of revenues from dominant business, only limited links exist A B C B A C
    19. 19. Pros and cons of diversified business <ul><li>Advantages </li></ul><ul><li>Spreading risk </li></ul><ul><li>Increased opportunity </li></ul><ul><li>Market power (growth) </li></ul><ul><li>Surety about long term existence </li></ul><ul><li>Sharing of resources e.g. labs </li></ul><ul><li>Disadvantages </li></ul><ul><li>Complexity </li></ul><ul><li>New business can be over valued </li></ul>
    20. 20. Examples of Diversified Business
    21. 21. DLF <ul><li>The group has over 224 million sq. ft. of existing development and 748 million sq. ft. of planned projects. </li></ul><ul><li>The company has also entered into several strategic alliances with global industry leaders </li></ul><ul><li>The business traditionally has been into three prime divisions: Homes, Offices and Shopping Malls. To these DLF has added three more divisions: Hotels, Infrastructure and SEZs </li></ul>
    22. 22. Key business of DLF <ul><li>Airport Modernization </li></ul><ul><li>Township Development </li></ul><ul><li>Hospitality </li></ul><ul><li>IT Infrastructure </li></ul><ul><li>Asset Management </li></ul>
    23. 23. UB Group <ul><li>United Breweries Group—popularly known Kingfisher group </li></ul><ul><li>The UB Group (United Breweries) Group is a multi-faceted conglomerate with business interests in </li></ul><ul><li>Beverage Alcohol-Bagpiper, McDowels, </li></ul><ul><li>Pharmaceuticals-Aventis Pharma Limited , </li></ul><ul><li>Media-Asian Age Holdings Ltd, </li></ul><ul><li>Aviation-Kingfisher Airlines Limited , </li></ul><ul><li>Fertilizer-Mangalore Chemicals & Fertilizers Limited , </li></ul><ul><li>Research & Development-Vittal Mallya Scientific Research Foundation </li></ul>
    24. 24. Tata Group <ul><li>98 operating companies in seven sectors </li></ul><ul><li>Group was founded by Jamsetji Tata in the mid 19th century, </li></ul><ul><li>The Tata Group is one of India's largest and most respected business conglomerates, with revenues in 2006-07 of $28.8 billion (Rs129,994 crore), the equivalent of about 3.2 per cent of the country's GDP </li></ul><ul><li>The Tata family of companies shares a set of five core values: integrity, understanding, excellence, unity and responsibility. </li></ul><ul><li>The Tata Group has operations in more than 80 countries across six continents, and its companies export products and services to 85 countries. </li></ul>
    25. 25. Major Companies <ul><li>TCS- software firm </li></ul><ul><li>TISCO- iron and steel firm </li></ul><ul><li>Tata telecommunications </li></ul><ul><li>Tata tea Inc-major brands are Tata Tea, Tetley Tea etc </li></ul><ul><li>Tata Motors- Indica, Indigo, Nano </li></ul><ul><li>Tata Construction Equipment company </li></ul>
    26. 26. Reliance ADAGroup <ul><li>Among India’s top three private sector business </li></ul><ul><li>Across different companies, the group has a customer base of over 100 million, the largest in India </li></ul><ul><li>a shareholder base of over 12 million, among the largest in the world. </li></ul><ul><li>Through its products and services, the Reliance - ADA Group touches the life of 1 in 10 Indians every single day. </li></ul>
    27. 27. RelianceADAG companies <ul><li>Reliance Capital-interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking </li></ul><ul><li>Reliance Communications Limited </li></ul><ul><li>Reliance Energy Limited-generation of electricity </li></ul><ul><li>Reliance Health </li></ul><ul><li>Reliance Media & Entertainment-ADLABS, BigFM, Mobile TV, DTH </li></ul>
    28. 28. Comparison w.r.t. businesses <ul><li>US economy is heading towards core business </li></ul><ul><li>Indian economy is heading towards diversified business </li></ul>
    29. 29. Reasons <ul><li>Collectivism in Indian economy </li></ul><ul><li>Opportunities in India are more </li></ul><ul><li>US Economy is stagnant and India is developing economy </li></ul><ul><li>More and more companies want to come to India </li></ul><ul><li>Competition </li></ul>
    30. 30. Thank You <ul><li>Robin Kapoor </li></ul><ul><li>Sourabh Garg </li></ul><ul><li>Deepak Kumar </li></ul><ul><li>Yogendra Dwivedi </li></ul><ul><li>Vikas Sharma </li></ul><ul><li>Tushar Garg </li></ul><ul><li>Prateek Nahar </li></ul><ul><li>Pankaj Jain </li></ul>
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