Ø Vision
of Aditya Birla Group is ‘To be premium global conglomerate with a clear focus
on each business’.
Ø In
1995 Kumar Birla inherited with a US$ 1.5 billion conglomerate with investment
in cement, textile, aluminum, fertilizers, tea, carbon black, sponge iron,
shipping, palm oil refining, chemicals and assortment of small business, mostly
to support vertical integration. Aluminum and textile had major share in
revenue.
Ø In
the decade of reform beginning in 1996, the Birla Group followed several
principles, first, the “rule of three” mandated that company should be among
top 3 player in the world or at least in a region for any particular investment.
Second was to grow a business in a sector where the group had dominant present
and track record of strong performance. Third was increase in vertical
integration to reduce cost structure and improve cost efficiency .Fourth,
economies of scale was to be found by consolidating similar business unit into
larger firms.
Ø By
2008 Birla Group had three flagship companies; Grasim Industries, Hindalco
Industries and Aditya Birla Nuvo (AB Nuvo).Grasim and Hindalco focused on
commodity business and was following principle of vertical integration, while
AB Nuvo was shifting its balance from value companies to growth sector.
Ø From
the above facts we can say that Birla was focusing on its core business, it was
also focusing on vertical integration to reduce operating cost. Similarly the
Birla Group perused a dual track strategy of improving return for value
business while using its cash flow to expand into growth sector.
Contributed by:-
Umang Bhone
Section B
Strategic Management
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