Many companies run more than one business unit. Even if structured as one company, there may be two or more business units within it. Once a company has more than one business unit, a new set of strategic questions open up. Why combine these business units in one company, rather than run them separately?
When is it useful?
Typically, the damage multibusiness companies do to business units are underestimated, and the synergies overestimated. Value could be released from spin-offs and demergers.
How do you do the analysis?
The answer rests on analyzing two areas:
- What damage is done by combining them in the same company? Does the corporate centre understand all the businesses? Do they have similar Key Success Factors? Can one management style/culture serve them all?
- What are the benefits of combining these business units in the same company? What are the synergies? What new business can be created that could not be if the units were in different companies?
I want to know more
Corporate Strategy: Michael Goold; Marcus Alexander and XXXXX
How can you adapt this concept?