Diversification strategies of ABG Introduction Diversification is typically defined as a strategy which takes the organisation into new markets

and products/services and therefore increases the diversity that the corporate parent must oversee. Diversification involves moving into new lines of business. When an industry consolidates and becomes mature, most of the firms in that industry would have reached the limits of growth using vertical and horizontal growth strategies. If they want to continue growing any further the only option available to them is diversification by expanding their operations into a different industry. Diversification strategies also apply to the more general case of spreading market risks: adding products to the existing lines of business can be viewed as analogous to an investor who invests in multiple stocks to spread the risks. Diversification into other lines of business can especially make sense when the firm faces uncertain conditions in its core product-market domain. A company may have number of reasons for going in for diversification: efficiency gains from applying the current resources and capabilities, increasing market power by providing a diverse range of products, to respond to environmental changes or to spread risks across a range of businesses; but not every diversification move of a company is successful. Kumar Mangalam Birla is very focused on his stated philosophy and wants to be among the top three in most of the businesses he is in on a global basis. He infused fresh blood into the group, also retained many seniors such as Askaran Agarwala and Dwarka Das Rathi, who continued to lead group companies. Aditya Birlas strategy is to use new facilities financed at lower than market rates by international development organizations, employ the latest management techniques, use local skilled labor in meeting special customer needs to gain customer loyalty and develop both economies of scale and scope using focused centralized management and global strategies to grow and dominate basic industries. That strategy was evident in the development of Alexandria Carbon Black and is described in this case study. ENTERED Telecom, copper, branded apparel, BPO, retail, aerospace alloys, seeds and agrochemicals, solar power and wind power EXITED Sea water magnesia, petroleum refining (Mangalore Refineries), synthetic and blended yarn textiles (Gwalior Rayon), spinning, industrial gases, medical gloves, files, refined palm oil, palmolein, glycerin, sponge iron

Organic growth will account for at least $20 billion of additional revenues, while the metals business, Hindalco-Novelis, will lead the inorganic growth and account for 40 per cent of revenues within five years.Today, Hindalco-Novelis has revenues of $16 billion, or close to half the group's total. The biggest at Hindalco Industries was the acquisition of Novelis, four times Hindalco's size then. "It is like Sensodyne and Colgate. The project to refinance the debt taken on to acquire Novelis, the Atlanta-based aluminium rolledproducts manufacturer, was called 'Nalanda'. About Company A US $35 billion corporation, the Aditya Birla Group is in the League of Fortune 500. It is anchored by an extraordinary force of over 133,000 employees, belonging to 42 different nationalities. The Group has been ranked Number 4 in the Global 'Top Companies for Leaders' survey and ranked Number 1 in Asia Pacific for 2011. 'Top Companies For Leaders' is the most comprehensive study of organisational leadership in the world conducted by Aon Hewitt, Fortune Magazine and RBL (a strategic HR and Leadership Advisory firm). Over 60 per cent of its revenues flow from its overseas operations. The Group operates in 36 countries Australia, Austria, Bangladesh, Brazil, Canada, China, Egypt, France, Germany, Hungary, India, Indonesia, Italy, Ivory Coast, Japan, Korea, Laos, Luxembourg, Malaysia, Myanmar, Philippines, Poland, Russia, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tanzania, Thailand, Turkey, UAE, UK, USA and Vietnam.

Objective

To conduct Strategic Audit to understand in detail the resources and competencies of Aditya Birla Group. Steps involved in Strategic Audit: a. Resource Audit b. Value Chain Analysis c. Core Competency Analysis d. Performance Analysis e. Portfolio Analysis f. SWOT Analysis

http://tutor2u.net/business/strategy/Strategic_audit.htm

To Study the growth startegies used by Aditya Birla Group (ABG) and link it with Mckinsey Growth Model. e.g :- Acquisition of Novelis

http://tutor2u.net/business/strategy/mckinsey_pyramid.htm

(should we elaborate the above points) Astha please write the Objectives of Study discussed with Ankit..........M not able to foemulate it

To study the product diversification strategies of Aditya Birla Group, which started with a jute mill in 1919, and till today has become a strong conglomerate operating in more than 33 countries. The group has diversified business interests and is dominant player in all the sectors in which it operates such as viscose staple fibre, metals, cement, viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers, insulators, financial services, telecom, BPO and IT services. The Aditya Birla Groups strategy has been to diversify into capital-intensive businesses and become a cost-leader by leveraging on its various strengths