Execution Edge assists large corporations to determine what direction to take and define their operating models. This could involve leveraging institutional factors that support the growth of conglomerates or developing alternative strategic responses that highly diversified corporations require to be able to respond to institutional reforms in those emerging markets.
Research indicates that over time, Conglomerates generate better returns than a comparable portfolio of individual companies because they benefit from diversification. On the other hand, conglomerates face the risk of becoming too diversified, which could create institutional inadequacies, complexities and inefficiencies as they face increased pressure to be profitable in all their markets.
With increasing diversification, conglomerates may create less shareholder value than focused companies because of poor performance and their inability to sustain their product lines. Over time, the overstretching becomes evident in one or more of the following: shortages of critical skills; growing indebtedness and multiple or increasingly complex alliances, leading to unsustainable levels of diversification.
This could result in the conglomerates becoming too weak and fragile to withstand any unexpected downturn in the operating environment.
Execution Edge can help conglomerates respond to these emerging realities so conglomerates are able to keep their level of diversification in tune with their evolving environment.
We work with our clients to:
- (Re)articulate their corporate and business strategy,
- Re-organise the corporate and business unit structure to fill in the institutional inadequacies,
- Improve on operational efficiency and effectiveness,
- Establish an effective corporate governance, risk and compliance structure and practices,
- Strengthen corporate and legal infrastructure requirements.