CORE BUSINESS

VS

DIVERSIFIED BUSINESS
 Core Business
Vs
Diversified Business
 Core Business
 The core business of an organization is
an idealized construct intended to express
that organization's "main" or "essential"
activity
 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
 The concept of core business became
prominent in the 1980s
 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
 Pros and Cons of core
business
Advantages
 Focus is defined.

 Clear identity.

 Bring innovations in their respective

fields.
Disadvantages
 risk
Examples of Core
business
 Maruti Udyog Ltd.
 Incorporated-February 1981
 Joint Venture-October 1982
 Facilities - Gurgaon: 3 vehicle
assembly plants
Manesar: 1 vehicle assembly plant
Head Office in New Delhi, India
Regional offices: 16
 Employees-4993 of Financial year
2006-07
 Maruti assembles different models of
cars for different segments.
11 Models of Maruti
Infosys
• Infosys Technologies Ltd. (NASDAQ: INFY)
was started in 1981 by seven people with
US$ 250.

• Today, we are a global leader in the "next

generation" of IT and consulting with
revenues of over US$ 3 billion.

• Infosys defines, designs and delivers

technology-enabled business solutions
that help companies globally.
Infosys Continued…..

• Infosys also provides a complete

range of services by leveraging our
domain and business expertise and
strategic alliances with leading
technology providers.

• Infosys takes pride in building

strategic long-term client
relationships. Over 95% of our
 Arcelor Mittal
The world's number one steel
company, with 310,000 employees in
more than 60 countries.

Revenues of US$ 105.2 billion, with a

crude steel production of 116 million
tonnes.
Products and Services of Arcelor Mittal

Tubular services
Stainless steel
Wire
Automotive
Construction Material
Distribution
Steel Services Centers
Domino’s
 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.

 Domino's Pizza India Ltd. has proceeded to become one of the

largest and fastest growing international food chains in South
Asia.

 First Domino's Pizza store in India opened in January 1996, at

New Delhi.

 Presently over 165 outlets in 33 cities and is the leader in the fast
food delivery segment.

 Customers can order their pizzas by calling a single countrywide

Hunger Helpline - 1800-111-123.
Dominos continued..
 Domino's vision is focused on " Exceptional people on a mission
to be the best pizza delivery company in the world!".

 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.

 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.

 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.
Diversified Business
 Meaning
 Business that operates in more than
one industry or market, and uses
different distribution channels as a
matter of corporate strategy.
 A company may attempt to
manufacture the products itself, or it
may acquire or merge with an
ongoing organization.
 Diversified Business
Why Diversification?
The two principal objectives of
diversification are
 improving core process execution, and/or
 enhancing a business unit's structural
position

Forms and Means of Diversification

Diversification typically takes one of three
forms:
 Vertical integration - along your value
chain
 Horizontal diversification - moving into
History of diversification
 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

 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
 Fortune 500 companies with >25% revenues from
diversified activities
 1950 38%
 1974 63%
 1988 47%
 Firms Vary by Degree of
Diversification
Low Levels of Diversification
Single-business > 95% of revenues from a
A
single business unit Eg DLF
Dominant-business Between 70% & 95% of revenues
A B
from a single business unit Eg UB

Moderate to High Levels of Diversification

A
Related constrained < 70% of revenues from dominant
Eg Hero Group business; technological & distribution B C
links
A
Related linked (mixed) < 70% of revenues from dominant
business, only limited links exist B C

High Levels of Diversification Eg Tata Group A

Unrelated-Diversified Business units not closely related B C
Pros and cons of diversified
business
Advantages
 Spreading risk
 Increased opportunity
 Market power (growth)
 Surety about long term existence
 Sharing of resources e.g. labs

Disadvantages
 Complexity
 New business can be over valued
Examples of Diversified
Business
 DLF
 The group has over 224 million sq. ft. of
existing development and 748 million sq.
ft. of planned projects.
 The company has also entered into
several strategic alliances with global
industry leaders
 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
 Key business of DLF
 Airport Modernization

 Township Development

 Hospitality

 IT Infrastructure

 Asset Management
 UB Group
United Breweries Group—popularly
known Kingfisher group
The UB Group (United Breweries) Group is a
multi-faceted conglomerate with business
interests in
 Beverage Alcohol-Bagpiper, McDowels,
 Pharmaceuticals-Aventis Pharma Limited ,
 Media-Asian Age Holdings Ltd,
 Aviation-Kingfisher Airlines Limited ,
 Fertilizer-Mangalore Chemicals &
Fertilizers Limited ,
 Research & Development-Vittal Mallya
Scientific Research Foundation
 Tata Group
 98 operating companies in seven sectors
 Group was founded by Jamsetji Tata in the mid 19th
century,
 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
 The Tata family of companies shares a set of five core
values: integrity, understanding, excellence, unity and
responsibility.
 The Tata Group has operations in more than 80
countries across six continents, and its companies
export products and services to 85 countries.
 Major Companies
 TCS- software firm
 TISCO- iron and steel firm
 Tata telecommunications
 Tata tea Inc-major brands are Tata Tea,
Tetley Tea etc
 Tata Motors- Indica, Indigo, Nano
 Tata Construction Equipment company
 Reliance ADAGroup
 Among India’s top three private sector
business
 Across different companies, the group has
a customer base of over 100 million, the
largest in India
 a shareholder base of over 12 million,
among the largest in the world.
 Through its products and services, the
Reliance - ADA Group touches the life of 1
in 10 Indians every single day.
 RelianceADAG companies
 Reliance Capital-interests in asset
management and mutual funds, life and
general insurance, private equity and
proprietary investments, stock broking
 Reliance Communications Limited

 Reliance Energy Limited-generation of

electricity
 Reliance Health

 Reliance Media & Entertainment-ADLABS,

BigFM, Mobile TV, DTH
 Comparison w.r.t.
businesses
 US economy is heading towards core
business
 Indian economy is heading towards
diversified business
 Reasons
 Collectivism in Indian economy
 Opportunities in India are more
 US Economy is stagnant and India is
developing economy
 More and more companies want to
come to India
 Competition
Thank You