Page 129 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 7: Corporate Level Strategies

Overall, the biscuit category grew by 58% during the last quarter, ready-to-eat foods Notes
under the Kitchens of India and Aashirvaad brands by 63%, and the lifestyle business by
26%.
For the industry, the most significant initiative to watch was ITC's foray into premium
personal care products with its Fiama Di Wills range of shampoos, conditioners, shower
gels, and soaps. In the popular segment, ITC has launched a range of soaps and shampoos
under the brand name Superia.

Ravi Naware, chief executive of ITC's foods business, was quoted recently as saying that
the business will make a positive contribution to ITC's bottomline in the next two to three
years.
In hotels, ITC's Fortune Park brand was making the news during the year, with a rapid
rollout of first class business hotels.

In the agri-business segment, the e-choupal network is trying out a pilot in retailing fresh
fruits and vegetables. The e-choupals have already specialised in feeding ITC high quality
wheat and potato, among other commodities, grown by farmers with help from the
e-choupal.

Source: Financial Express, Article by Somnath Dasgupta
Diversification into both Related and Unrelated Businesses: Some companies may diversify
into both related and unrelated businesses. The actual practice varies from company to company.
There are three types of enterprises in this respect:
1. Dominant business enterprises: In such enterprises, one major “core” business accounts for
50 to 80 per cent of total revenues and the remaining comes from small related and
unrelated businesses, e.g. TISCO.

2. Narrowly diversified enterprise: These are enterprises that are diversified around a few
(two to five) related or unrelated businesses e.g. BPL.
3. Broadly diversified enterprises: These enterprises are diversified around a wide-ranging
collection of related and unrelated businesses e.g. ITC, Reliance Industries.
Means to Achieve Integration or Diversification: Profitable growth is one of the prime objectives
of any business firm. Growth can be achieved internally or externally. Internal growth in assets,
sales and profits takes place when the firm introduces a new product or increases the capacity for
the existing products through setting up a new plant. Increasing the capacities through internal
growth takes time and involves lot of risk. Alternatively, business firms can suddenly increase
their growth rate by acquisitions, mergers, etc. These strategies are often referred to as cooperation
strategies.
As already mentioned, growth especially by way of integration or diversification can be achieved
through four basic means:
1. Mergers and acquisitions
2. Joint ventures

3. Strategic alliances
4. Internal development
With the opening up of the Indian economy, business firms have the freedom to expand, diversify
and modernize the operations and set up new undertakings. Market forces continue to play the
role and experienced entrepreneurs always remain in search of opportunities to take over units
and to expand their operations. So the free economic environment plays a very important role
in accelerating the merger and acquisition activities.

LOVELY PROFESSIONAL UNIVERSITY 123