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    What's Different About Conglomerate Management: Presented By

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    Nitin Rawat
    This document compares and contrasts the management of conglomerates versus diversified major companies. Conglomerates are companies that have become highly diversified through recent acquisitions in unrelated areas, while diversified majors grew over the long term into related areas. Conglomerates tend to have smaller corporate staffs, more autonomous divisions, and executives with generalized business skills. They also focus on acquiring and running businesses separately, while diversified majors emphasize coordination among divisions and operating economies of scale. Both types of diversified companies can learn from each other's approaches.

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    What's Different About Conglomerate Management: Presented By

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    Nitin Rawat
    70 views12 pages
    This document compares and contrasts the management of conglomerates versus diversified major companies. Conglomerates are companies that have become highly diversified through recent acquisitions in unrelated areas, while diversified majors grew over the long term into related areas. Conglomerates tend to have smaller corporate staffs, more autonomous divisions, and executives with generalized business skills. They also focus on acquiring and running businesses separately, while diversified majors emphasize coordination among divisions and operating economies of scale. Both types of diversified companies can learn from each other's approaches.

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    This document compares and contrasts the management of conglomerates versus diversified major companies. Conglomerates are companies that have become highly diversified through recent acquisitions in unrelated areas, while diversified majors grew over the long term into related areas. Conglomerates tend to have smaller corporate staffs, more autonomous divisions, and executives with generalized business skills. They also focus on acquiring and running businesses separately, while diversified majors emphasize coordination among divisions and operating economies of scale. Both types of diversified companies can learn from each other's approaches.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    70 views12 pages

    What's Different About Conglomerate Management: Presented By

    Uploaded by

    Nitin Rawat
    This document compares and contrasts the management of conglomerates versus diversified major companies. Conglomerates are companies that have become highly diversified through recent acquisitions in unrelated areas, while diversified majors grew over the long term into related areas. Conglomerates tend to have smaller corporate staffs, more autonomous divisions, and executives with generalized business skills. They also focus on acquiring and running businesses separately, while diversified majors emphasize coordination among divisions and operating economies of scale. Both types of diversified companies can learn from each other's approaches.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12

    Whats Different About

    Conglomerate Management

    Presented by:Arka Goswami (15125008)


    Nitin Rawat (15125026)

    Conglomerate:

    A company that has


    become highly diversified quickly, through a
    series of recent acquisitions and mergers, in
    unrelated areas.
    Diversified Major: A company that has
    become highly diversified over a long period of
    time, primarily through internal expansion into
    related areas
    Time Span of Growth
    Ease of Financing (M&A)

    Internal Differences
    Corporate General Office and contribution of top
    management
    Autonomous Divisions and easier access to financial
    resources
    Executives with generalised business skills and
    policies that facilitates the application of such skill.
    .

    Corporate
    The roles played by the line and staff, management and non-management
    Management Style
    people above division level to the overall performance of the company
    Size of Corporate
    Staf
    Conglomerates have smaller corporate staf than diversified
    majors
    Corporate staf 100 200 compared to many thousands
    Cultural factor Conglomerates are young and makes more
    acquisitions, maters managed at divisional level, less
    inclination towards support from corporate staf.
    Diversified majors Internal expansion into related activities,
    extensive coordination amongst division needed, more
    corporate support

    Decentralised
    Divisions
    Individual division managers motivated to coordinate in their own
    interest
    Increased coordination by corporate staf Vs. Decentralised
    autonomy
    Decentralization: Responsibility, development of personnel,
    decision close to facts, adaptability, flexibility
    Coordination: efficiency, economies
    Autonomy of division
    Build up coordinated decentralisation
    managers
    Entrepreneurial climate
    Conglomerate division managers enjoy more autonomy than
    diversified majors
    Divisions previously independent company less coordination,
    cooperation
    Division managers capable of executing higher responsibility

    Loss of synergy
    No clear reason to believe that conglomerates create better
    synergy than diversified majors.
    Exception: where conglomerates can combine technologies and
    moving faster with acquisitions and joint ventures with necessary
    companies.
    But some companies have followed a diferent path by avoiding
    acquisitions and simplifying their administrative problems at both
    corporate and divisional level.

    Division Performance
    Opportunity for achieving operational improvements
    Depends on needs of the acquired company and skills of the
    acquirer
    Improvement can be done by addition of resources, management
    skills, incentives

    Strategic Planning
    In Conglomerates, corporate management play greater role in
    the strategic planning of the division
    Conglomerates helps acquired companies in forming new
    structures which focuses more on strategic planning
    Approach make small group of line executives which are
    responsible for planning the future of the business
    Focus more on economic return and search for opportunity

    Information System
    Provides well managed information system focus on financial
    performance of divisions
    Concentrate measures on economic performance and less
    attention to detailed operating statistics

    Increased Motivation
    Use of basic schemes like stock option and incentive compensation
    Conglomerate managers measure the managers performance on
    the economic performance of their division
    Believe the more diversified a company, the greater the need and
    tendency of corporate management to rely on financial incentives

    Financial Resources
    Access to additional corporate funding
    Benefits will be available easily without much risk
    Advantages of having financial resources in a diversified
    company
    1. Can support few divisions which are in crunch of cash flows
    2. Utilize the profit earned in one division to cover expenses of
    other without incurring taxes

    Specialized Services

    Conglomerates can provide specialized services to divisions


    Company president will transform into division manager . Less
    involvement in relationship building with clients , stakeholders
    Primarily responsible for running his business

    Conclusions
    Quest for growth, improved profits & Stability made organizations
    diversified
    Management approach diferent from diversified majors
    Role of corporate management with divisions is very critical
    Conglomerates focus smaller corporate stafs, rely on
    generalized business, see divisions are well managed, acquiring
    and running separate businesses
    Diversified Majors- operating economies, central research
    laboratory, coordination among division
    Both needs to learn from one other

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