Question 1: Critically analyze the growth strategy adopted by the Aditya Birla Group. What are your views on the business portfolio adopted by the group? (7 marks)
Aditya Birla Group is one of the first multinational corporations in India. Its headquarter is located in Mumbai with many others operations in different parts of the world such as in Asia (Thailand, Singapore, Myanmar, Laos, Indonesia, Philippines, China…), Europe (UK, Germany, Hungary, Italy, France, Luxembourg, Switzerland…), America (US, Brazil…). Throughout their growing, Aditya Birla have become well known in many sectors that they get involved in not only in India but also around the world. Back to the earlier day of the corporation, when it first founded, the group has focused on critical sector such as textiles and fibre, aluminum… and become one of the largest participant in those areas. Later on, in the 1960s, the company had expanded their business into cement and chemicals. Also, they expanded their business across the border of India into many other countries. This “revolution” has brought the name of the group into the international business map and become bigger than ever (Aditya Birla Group 2007). Today, ABG is a corporation with the consolidate revenue of 30bil with the affiliates in 45 countries and 60% of their revenue come from internationally and become one of the largest private company in the world (Aditya Birla Nuvo Limited, 2011).
To gain such an outstanding achievement both domestically and internationally, the Aditya Birla Group has adopted two strategies: to diversify their business’s portfolio into a range of sector and to diversify them internationally. Firstly, to reach the first goal, they stepped in many areas such as viscose staple fiber, metals, cement, viscose filament yarn, branded apparel, carbon black, chemicals, fertilizers, insulators, financial services, telecom, BPO and IT service. By entering to multiple sectors, the company has seen which sectors is their strength so that they can focus more on it, also get rid of those businesses that does not show any efficiency. Furthermore, diversifying will help the company to spread the risk of being failed from the fact that one sector may gain losses (Durke Asset Management SA, nd). By spreading the risk through several sectors, it will not be totally wrong or totally right in all of them. Therefore the range of possible outcomes narrows.
Also, the strategy of expanding the group internationally will benefit the company by gathering talented people around the world to work for them. Talents who work in a multinational corporation would have to compete with each other to emphasize their positions and to prove their abilities. Hence, it will increase their commitments to the corporation and willing to contribute more for the company. This will provide a huge source of ideas, skills, motivation, and ... hence it will enhance better decision-making, problem solving, product development. All...