Business Management

1330 Words3 Pages

You are the CEO of a conglomerate with many businesses in many industries in many geographic regions.

a) Discuss what Goold and Campbell Style you are likely to adopt( justify your selection)

b) How do you manage synergies in the portfolio

c) How do you ensure companies you acquire fit into your ‘Heartland' in the Goold, Campbell, Alexander Parenting- Fix matrix? Specifically outline how you intend to add value to the acquisition you make.

(A)

Conglomerates face the challenges involved in managing multiple activities in multiple markets. One such challenge involves determining the best corporate style to manage these units in order to add value, and potentially more value than other parents could add and prevent these businesses being handicapped by the centre. Essentially, ‘putting one's eggs in different baskets" may reduce the risk in the overall portfolio but requires that the firms management possess the strong capabilities necessary to successfully execute this strategy. This in mind, the Goold and Campbell style that I would adopt is the strategic control style based on….

Because the company has many unrelated businesses, in many industries and in many geographic regions, it is quite unlikely that corporate centre management would be adept at the capabilities required to manage these businesses. Most corporate managers have experience in only one industry (or a few) and none realistically can be an expert in the wide variety of unrelated industries represented in a conglomerate. The business units' management is close to the markets in the different regions, familiar with the different cultures that exists in those markets, and is more likely to have intimate specialist knowledge of their particular businesses. They also need to be flexible and nimble at business-level decision making. As such at the centre we will focus on financial control, which does not require a lot of rich, industry-specific knowledge. Therefore the centre will impose a strict financial discipline of the sort GE's former chairman and CEO, Jack Welch imposed on all divisions- "Either become the world's top one or two in your industry, or expect your unit to be sold". Otherwise our corporate managers will experience information overload. The organizational structure will therefore be decentralized with substantial divisional autonomy. We will have little influence in developing strategies and there will not be a formal review of long term plans. We will only agree and monitor short-term financial targets for the businesses and provide support to the businesses in helping them to grow.

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