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Managing Multi Business Firm

Internationalisation or Globalisation is fast becoming imperative for modern businesses due to

technological innovations, crumbling trade barriers ,global flow of capital and technology
,information explosion ,intensity of market competition ,changing life styles and the demand for
new products.
Political boundaries are no barriers to business. Production facilities are being set up in different
countries and products are being sold through a global network. Gradually, business houses are
exposed to manage multi business firm at a time i.e managing the diversification.
In the International Market today, businesses are characterized by diversification. The product
portfolio of large business house reads like who is who. The TATA Group, a premier business
house has already iron and steel, fertilizers, light commercial vehicles ,power, chemicals, tea,
textiles, shipping, hotel services, electronics, marine products, printing, oil and consultancy
under its belt.
Now, Dimensions are vital and need to be properly integrated in the globalization for managing a
multi business firm successfully.Firms are engaged in a chain of activities in the global market
place.These activities have business and nonbusiness aspects and consequences. In the global
environment it is impossible for any multi business firm to perform its economic tasks without
involving social,political and other nonbusiness functions.
Managing a multi business firm is a big challenge. Many companies in the world expand too far
all in the name of Multi Business Firm. Several bigwigs reportedly burnt their fingers. DCM,
Brooke Bond ,ITC, Larsen and Toubro ,Indian Organic Chemicals, Nelco, Eskayef and Ranbaxy
Laboratories etc .
In this era, to manage the Multibusiness Corporation below mentioned points are required:
1.Managing the corporate portfolio
2.Analysis of orientation approaches
3.The role of corporate management
4.Structure of the multi-divisional Co.
5. Managing individual businesses
6.Managing internal Linkages.

Managing the corporate portfolio

By incorporating a risk-return perspective into Corporate Portfolio Management, organizations
will be better equipped to answer the following questions:
How can riskbe incorporated into the decision making process so that multiple investment
options are consistently evaluated?
Will the expected return in any single investment justify the level of risk required to pursue this
What is the optimal combination of investment options to achieve our mid- and long-term
strategic objectives?
Where should I spend my next investment dollar?
Analysis of orientation approaches
While managing a multi business firm one has to analyse the approach which the company is
using i.e Ethnocentric, Polycentric, Regiocentric and Geocentric. In case if the co. is following
Ethnocentric approach then Top to Bottom structure is followed for giving instructions, in
Polycentric , Regiocentric and Geocentric both the approaches i.e top to bottom and bottom to
top can be considered depending upon the policies of the company.
Role of Corporate Management
Portfolio planning methods have been used for strategic decision making for over 20 years. They
are presented as diagnostic aids and as prescriptive guides for selecting strategic options The
general idea is to classify positions of products along two dimensions: attractiveness of the
market and ability of the product to compete within that market.
The Corporate Management Team performs following functions:

Deciding the managerial leadership style

Giving directions in relation to organizational structure and Organisational Design.

the formal response to the Concerned Govt. and the authorities.

Maintaining Coordination in the multi business firm

Doing effective planning.

Structure of the multi-divisional Co.

Multi-divisional forms simply means that there is one parent company, and that parent company
owns smaller companies that use its brand and name. A multidivisional organizational structure

aligns a company according to individual divisions, which are based on geographic locations,
products or services. For example, a moving company might create a geographic-divisional
structure, which includes the Texas and California divisions. As an alternative, a manufacturing
company might implement a product-based divisional structure that includes the cable assembly
and product engineering divisions. In contrast, a professional services company might organize
around service lines, such as the personal and business services divisions.
Managing individual businesses
Individuals are responsible for the accuracy and completeness of the information. Individuals
have to know how to communicate, flexibility , team work and coordination, make decisions,
delegate, monitor achievement, give praise, enhance responsibility, and move teams forward. For
managing individual businesses Successful supply chain management is required for crossfunctional integration and marketing.Its a big challenge for the individual businesses to
successfully accomplish this integration.
Managing Internal Business Linkages
Internal Business linkages exist between just in time, total quality management, and supply chain
management are viewed by organizations as part of their operations strategy. In managing multibusiness firm these links plays very important role.