Concentric Diversification


Grand strategies involving diversification represent distinctive departures from a firm’s existing base of operations, typically the acquisition or internal generation (spin-off) of a separate business with synergistic possibilities counter-balancing the strengths and weaknesses of the two businesses. Diversifications occasionally are undertaken as unrelated investments, because of their high potential and their otherwise minimal resource demands.

Concentric diversification involves the acquisition of businesses that are related to the acquiring firm in terms of technology, markets, or products. With this grand strategy, the selected new businesses possess a high degree of compatibility with the firm’s current businesses. The ideal concentric diversification occurs when the combined company profits increase the strengths and opportunities and decrease the weaknesses and exposure to risk. Thus, the acquiring firm searches for new businesses whose products, markets, distribution channels, technologies, and resource requirements are similar to but not identical with its own, whose acquisition results in synergies but not complete interdependence.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

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Leadership Styles


An effective leader recognizes that there are variations in leadership styles. The three basic styles are autocratic, free rein, and democratic. Autocratic leaders make decisions on their own, without consulting others. Democratic leaders involve their subordinates in making decisions. Free-rein leaders believe in minimal supervision, leaving most decisions to their subordinates.

The best leadership style is one that varies with the circumstances, changing according to three elements: the leader, the followers, and the situation. Some leaders are simply unable to encourage or even allow subordinates to participate in decision making. And some followers do not have the ability or the desire to assume such responsibility. Furthermore, the particular situation helps determine which style will be most effective. Problem requiring immediate solutions may have to be handled without consulting subordinates. With less time pressure, participative decision making may be desirable.

A democratic leader may be forced by circumstance to be autocratic in making a particular decision. Managers are increasingly moving toward a more democratic style of leadership. They find that workers involved in decision making tend to be more interested in the overall organization and may be more motivated to contribute to organizational objectives that those not involved in decision making.

No single best style of leadership exists. The most effective leadership style depends on the power held by the leader, the difficulty of the tasks involved, and the characteristics of the workers. Extremely easy and extremely difficult situations are best handled by leaders who emphasize task accomplishment. Moderately different situations are handled by leaders who emphasize participation and good working relations with subordinates.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Primitive Organizations


Primitive organizations exhibit all the classic features of any start-up. Energy and anticipation are usually high and the right startup can almost run on pure adrenalin.

Primitive organizations naturally perform the things that other types of organizations have to work hard to achieve. Formal structure and communication is not yet necessary, as enthusiasm and team spirit can carry the organization along.

In the early stages most primitive organizations manage to operate under one working culture and build effective internal and external relationships. This state of affairs can’t last, however, as primitive organizations are naturally transient. When the initial honeymoon period passes, the culture of the organization will change of its own accord.

All that is up for debate is how much it will change, how fast it will change and whether that change will be managed or if nature will be allowed to take its own course.

As is the case with all organizations, primitive organizations face the choice of managing their culture from the word go, or leaving it to chance. Unfortunately too many organizations rely on the natural spirit associated with being a primitive startup and de-prioritize cultural investment, choosing to concentrate on what they see as operational necessities.

To a point this is understandable, but this attitude reflects some common misconceptions.

  • An organization’s honeymoon period or primitive stage can be incredibly short, which catches a lot of organizations out – and once the damage is done, it’s done. Remedial work is always harder and significantly more draining and time-consuming than positive effort.
  • Proactive cultural and relationship management right from the start can be achieved at minimal cost in terms of time and money, and will deliver benefit for years to come. It is worth remembering that managing a working culture does not mean over-engineering it: in fact, it should mean quite the opposite. Good practice from day one is what creates long-term amazing relationships and long-term success.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.