Why Multibusiness Strategies Fail and How to Make Them Succeed: A NewsArticle
By [Your Name], Senior Journalist
[City,Date] – Multibusiness enterprises, despite their prevalence, often struggle to achieve their full potential. A new study by Harvard Business School professors Bharat N. Anandand David J. Collis reveals why: many companies prioritize portfolio composition over the crucial task of enhancing the businesses within it. This flawed approach leads to underperformance, with the market capitalization of many diversified enterprises lagging behind the combined value of their individual businesses.
The key takeaway from the study is that strategies for adding value to a corporation’s businesses fall on a continuum, ranging from completelyunrelated businesses to those with significant similarities. Each position on this continuum requires a distinct organizational structure and specific management processes to support it.
The authors emphasize that success hinges on understanding where a company falls on this spectrum and aligning its portfolio selection, structure, and processes accordingly. This means tailoring the company’s approach to value creation based on the nature of its businesses.
The Problem:
- Overemphasis on portfolio composition: Companies often get caught up in acquiring or divesting businesses without a clear strategy for how to enhance their performance.
- Neglecting value creation: The focus on portfolio composition overshadows the critical task of adding value to the businesses within the portfolio.
The Result:
- Underperformance: The market value of the diversified enterprise fails to reflect the combined value of its individual businesses.
The Solution:
- Align structure and processes with value creation: Companies need to identify their position on the value creation continuum and adjust their structure and management processes accordingly.
- Tailor strategies: Each position on the continuum requires a unique approach to value creation.
The study provides a valuable framework for multibusiness enterprises toimprove their strategic effectiveness. By shifting their focus from portfolio composition to value creation and aligning their structure and processes with their chosen sources of value, companies can unlock the full potential of their diversified businesses.
This research has significant implications for business leaders, investors, and policymakers. It highlights the importance of strategic alignment and providesa roadmap for achieving success in the complex world of multibusiness enterprises.
[Your Name] is a senior journalist with extensive experience in covering business and finance. He has previously worked for leading publications such as Xinhua News Agency, People’s Daily, CCTV, The Wall Street Journal, and The New York Times.
Views: 0