ORGANIZATIONAL STRUCTURE

Why Conglomerates Thrive

(Outside the U.S.)
by J. Ramachandran, K.S. Manikandan, and Anirvan Pant
FROM THE DECEMBER 2013 ISSUE

C onglomerates may be regarded as dinosaurs in the developed world, but in emerging

markets, diversified business groups continue to thrive. Despite the recent global
economic slowdown, their sales rose rapidly during the past decade: by over 23% a
year in China and India, and by 11% in South Korea. Business groups accounted for 45, 40, and 20
of the 50 biggest companies (excluding state-owned enterprises) in India, South Korea, and
China, respectively, according to a recent McKinsey study.

They may be called different things in different countries—qiye jituan in China, business houses in
India, grupos económicos in Latin America, chaebol in South Korea, and holdings in Turkey. But no
matter where they are, business groups are becoming increasingly diversified. On average, they
set up a new company every 18 months, more than half the time in a sector unrelated to their
existing operations. Most of them are profitable. In India, they deliver above-average
performance: Companies belonging to the largest Indian business groups generated higher
returns on assets from 1997 to 2011 than the rest of the companies listed on the Bombay Stock
Exchange, according to a study we conducted, and more than 60% of those groups generated
better returns than a comparable portfolio of standalone companies did.

The success of the business group—a network of independent companies, held together by a core
owner—in most emerging markets is remarkable for several reasons. First, it defies history.
Conglomerates were all the rage in the United States and Europe for decades, but hardly two
dozen of them survive there today. By the early 1980s, they had been laid low by their poor
performance, which led to the idea that focused enterprises were better at creating shareholder
value than diversified companies were. Most conglomerates shrank into smaller, more
specialized entities.
The multidivisional company is the dominant structure for managing multiple business lines in
the West today. But it, too, faces challenges. Pioneered by DuPont and General Motors in the
1920s, the divisional structure was supposed to improve the parent’s ability to deal with
diversification. But the problems associated with the structure—extra layers of senior executives,
opaque accounting, the inability of headquarters to cope with different businesses, and so on—
have often made the whole less valuable than the sum of its parts. If that isn’t happening with
business groups, they must be more effective in some way—and it’s important for executives to
understand how.

Second, the unbridled expansion of business groups challenges the conventional wisdom that
they have succeeded in developing countries mostly because they’ve been able to compensate for
institutional voids there and, in the process, catalyzed their own growth. Since the early 1990s,
however, economic reforms in those nations have led to the creation of new institutions modeled
along Anglo-American lines: Legal infrastructures and corporate governance requirements have
been strengthened, and sophisticated market intermediaries have emerged. Although
institutional voids have contracted, and markets have become relatively more efficient, business
groups haven’t imploded, suggesting that making up for institutional inadequacies may not be
their only raison d’être.

Of course, countries take generations to develop efficient markets and institutions, so it may be
too early to conclude that. However, business groups are neither a temporary phenomenon nor
found only in developing countries; many, such as the Tata Group in India (which dates back to
1868), Jardine Matheson in Hong Kong (1832), Doosan in South Korea (1896), and Mitsubishi in
Japan (1870), were born over a century ago.

Third, business groups in developing countries have grown mainly through diversification, even
though U.S. investors believe that diversification destroys value. On Wall Street the typical
conglomerate discount ranges from 6% to 12%. That makes the structural choices today rather
stark: If a CEO can convince Wall Street that a new business relates to the current one, it can be
accommodated in the form of a division. Otherwise, the CEO will be compelled to divest or let go
of the opportunity, regardless of its promise, in order to retain the benefits of a focused
enterprise. Not surprisingly, in recent times conglomerates such as Fortune Brands, ITT, McGraw-
Hill, and Tyco have all broken up into more focused entities.
 U.S. investors think diversification destroys
value. On Wall Street the conglomerate
discount ranges from 6% to 12%.
Business groups represent an alternative to this “divisionalize or divest” approach. We’ve done
five years of research on them in India, and we’ve found that, because of the way they are
structured, they can manage a portfolio of enterprises better than multidivisional companies can.
Another major factor in their effectiveness, we’ve observed, is that their leaders have stopped
relying on family members and associates to oversee companies and created a formal
management layer, called the group center, which is organized around the office of the group
chairperson. That mechanism is helping smart business groups spot more opportunities and
capitalize on them while retaining their identity and values.

How Business Groups Are Different

Two Ways to Structure
Diversified Enterprises
The Multidivisional Company (M
Form)
A listed parent company directly
manages all the divisions.
Business groups are distinct from
multidivisional organizations in two ways. One,
unlike corporate divisions, the companies (or
affiliates) of a business group are legally
independent entities. The Tata Group, for

The Business Group (G Form) instance, comprises around 100 listed and

A holding company, often unlisted, holds
equity stakes in several independently
listed affiliates.
unlisted entities (some of which have more than
one division). Each affiliate has a separate board
of directors, is answerable to its own
shareholders, raises capital from investors on its
own, independently develops and executes
strategies, and creates its own incentives for
managers. To borrow a term that Anand
Mahindra, the chairperson of India’s Mahindra
Group, likes to use, a business group is a
“federation” of companies.

Two, in business groups, there’s a high level of involvement between ownership and
management. In some groups, the core owners, who may hold large equity interests in affiliate
companies, directly participate in overseeing them—as CEOs, functional heads, or board
members. An investment committee, composed of representatives of the core owner and the top
management of the key affiliates, usually reviews and approves all major investment decisions of
the group and its affiliates.

These features help business groups better navigate the challenges of operating diverse
businesses in three critical areas:

Decision making.
In multidivisional organizations, the top management teams of divisions are empowered to make
decisions—in theory. In practice, corporate headquarters casts a long shadow over divisional
management. And that destroys value. Michael Goold, Andrew Campbell, and Marcus Alexander
of the Ashridge Strategic Management Centre summed the reason up when they asked: “Why
should the parent’s managers, in 10% of their time, be able to improve on the decisions being
made by competent managers who are giving 100% of their efforts to the business?”

By contrast, the structure of a business group—especially the presence of separate boards of

directors with distinct fiduciary responsibilities—affords the affiliates’ top management greater
autonomy. The legal separation of each business also ensures that it’s affected less by the parent’s
dominant logic than the divisions in a company would be.

Incentive design.
While multidivisional organizations can base their incentives on the performance of each
business, the task is not without challenges. After all, a single corporate entity can tolerate only
so much variation in incentives. Moreover, it’s impossible to create a separate market-based
measure of performance for each division.

Because each affiliate in a business group is legally independent, it has greater latitude to tailor its
performance measurement systems to its distinctive needs. Its stock price also provides an
accurate market-based measure of performance. The combination of greater autonomy in making
decisions and more-appropriate rewards increases managers’ psychological ownership of the
affiliates, inspiring greater entrepreneurship.

Resource allocation.
In a multidivisional structure, business divisions allocate capital more efficiently than external
capital markets could, because their executives have better information. At the same time,
divisions have only limited control over free cash flows; surplus cash usually flows to
headquarters, which makes the call on redistributing it. This centralized system is susceptible to
supply-and-demand mismatches, bureaucratic delays, and favoritism. In business groups,
however, each affiliate retains the capital it raises and the cash it generates, largely mitigating
those problems. Further, the affiliate can raise capital directly from the financial markets, which
usually ensures better valuations.

In addition, membership in a business group provides access to the highly diverse resources of
sister companies, and that allows affiliates to tap greater growth opportunities. Our statistical
analysis of a large sample of Indian companies from 1994 to 2010 suggests that affiliates of the
biggest business groups had greater access to business opportunities than standalone companies
did. And the affiliates of more diversified groups had access to even more opportunities than
those belonging to less diversified groups.

A group’s core owners often play a critical role in exploiting these opportunities. Because their
associations with affiliates are long-term (whereas the average CEO tenure in the United States is
now just six or seven years), they have a rich understanding of all the affiliates’ capabilities,
knowledge, and assets. And their shareholdings give them the influence to coordinate those
resources in novel combinations. For these reasons, business groups often spot—and seize—
opportunities that multidivisional organizations can’t. (See the sidebar “How Tata’s Group Center
Drove Cross-Business Innovation.”)

Given these capabilities, it’s not surprising that

How Tata’s Group Center
Drove Cross-Business
Innovation
Although household water purifiers were
widely available in India for many years,
they were unaffordable to the poor, who
didn’t have access to clean drinking
water. Then in 2009, Tata Swach, a low-
cost water purifier, was launched. The
result of years of work among three Tata
companies—TCS, Tata Chemicals, and
the Titan Company—this purifier is
based on natural ingredients and
nanotechnology.
Tata Swach’s origins lie in research first
carried out by TCS, a software services
company. The company developed an
the portfolio of most groups consists of many
unrelated businesses. The Tata Group, for
instance, comprises affiliates operating in a wide
range of sectors including automotive,
chemicals, communications, consumer
products, energy, engineering services, financial
services, hospitality, information technology,
and steel. Similarly, the Aditya Birla Group
comprises 56 companies running businesses as
diverse as cement, textiles,
telecommunications, financial services, and
retailing.
The Role of the Group Center
 early prototype but declared it unviable Business groups may be positioned to pursue
and not a fit with its software business,
opportunities in unrelated industries, but the
and shelved the project. In 2006, R.
Gopalakrishnan, a senior member of coordination of strategies across affiliates is still
Tata’s group executive office, stumbled difficult. The affiliates’ legal independence,
across the prototype at TCS and became
industry specialization, and autonomous
intrigued by it. He revived the project,
suggesting that Tata Chemicals, with its resource allocation processes can set off
expertise in chemical-processing centrifugal forces that reduce a group to little
technologies, take the lead. The more than a portfolio of stocks. What’s more,
chemical company and the software
the heads of groups don’t have the same
service provider started working
together on it; later the group’s hierarchical authority over affiliates that the
watchmaker, the Titan Company, which CEOs of multidivisional firms do: Though the
had developed precision engineering
leaders of the affiliates do answer to the core
capabilities, joined in. Today Tata Swach
provides potable water that meets the owners, they don’t report to them; they report to
stringent standards of the U.S. their own boards of directors. In fact, group
Environmental Protection Agency at a
heads sometimes have to deal with affiliates that
cost of less than one paisa a person a
day. But without the interventions of the want to chart out destinies independent of the
group center, that collaboration among parent group.
the three businesses would not have
been possible, and Tata Swach would
never have come to market. Yet, as we have said, the unique value creation
potential of business groups lies in coordinating
the activities of affiliates. In India in particular,
that task was traditionally handled by an inner
circle of trusted managers and relied heavily on the group head’s personal charisma, as well as on
complex holding structures, interlocking directorates, and informal mechanisms, such as family
loyalties. However, the effectiveness and legitimacy of the informal coordination methods were
constrained after the Indian economy opened up to local and foreign competition, and global
corporate governance standards became the norm.

Several Indian groups imploded, but the progressive ones chose to increase their capacity to
manage new businesses. As the policy environment became less restrictive, the owners shifted
their role from helping their affiliates gain access to the corridors of government to helping them
formulate strategic goals, build organizational capabilities, find resources, and achieve their
growth aspirations. Over time, the process led to the development of the group center—a formal
management layer at group headquarters.
 Business Group Affiliates
Outperform Other
Enterprises
From 1997 to 2011, companies belonging
to the 50 biggest Indian business groups
had higher returns on assets than the
rest of the corporations listed on the
Bombay Stock Exchange.
In 1998, for instance, the Tata Group announced
the creation of a group executive office that
would strengthen its relationship with its
affiliates and review strategy issues. Soon after,
several groups, such as the Aditya Birla Group,
the Murugappa Group, and the Mahindra Group,
announced the formation of group centers that
would explore synergies between businesses
and forge strategic plans. The job of
coordination in the business group has shifted to
the group center, which acts as a centripetal
counter to the forces of fragmentation.

DATA: CMIE PROWESS

How the Group Center Adds Value
To add value, group centers guide activities
along two dimensions: strategy and identity.

Strategy work.
The group center helps affiliate companies develop and reshape their strategic frames. From its
vantage point, the group center can challenge the assumptions that affiliates hold and spur them
to set their sights higher. Typically, the center drives a three-part agenda:

Sensing distant opportunities.

Most multidivisional companies find it tough to manage opportunities across varying time
horizons; they often require different kinds of resources, mind-sets, skills, planning and
budgeting systems, and performance measurement processes. Unlike multidivisional companies,
though, business groups can create different systems for different horizons. When a group center
identifies a promising nascent business, it can incubate that business in an affiliate, in a
specialized entity, or by setting up a new company, where it won’t distract other affiliates from
focusing on their existing businesses.

In the 1990s, Anand Mahindra asked a number of people at his headquarters to scout for
opportunities beyond his group’s tractor and utility-vehicle businesses. Among the pitches he
received was one for a time-share-based hospitality business. Back then, time shares in India
were associated with shady operators and had a bad name. Mahindra sensed an opportunity to
leverage his group’s impeccable reputation and invested some $5 million in the business. By
2012, Mahindra Holidays & Resorts had become the market leader, with a stock market valuation
of over $500 million when it first went public. It has built a base of more than 150,000 members
today, delivered high levels of service—and wiped away the sector’s unsavory image in the
country.

Pursuing stretch opportunities.

Often the group center induces affiliates to look beyond their current environment and resources
and develop more-audacious strategies. Because its executives work closely with decision
makers across the group—sometimes as directors on boards, sometimes as mentors to the
affiliates’ CEOs—they generally gain valuable expertise and experience in nonroutine events, such
as M&A. By sharing those capabilities with affiliates, the group center can assist them in
achieving ambitious goals.

In 2007, the Aditya Birla Group’s flagship, Hindalco, India’s largest integrated aluminum
producer, bid for Atlanta-based Novelis, the world’s leading producer of rolled aluminum.
Although it was not performing well, Novelis was four times the size of Hindalco, and many
believed that the Indian company was overreaching. The bid had unqualified support, however,
from the group center, which thought that the acquisition would give Hindalco global scale, a
portfolio of premium products, and technological expertise. Hindalco eventually bought Novelis
for $6 billion and turned it around. Executives at the group center played a crucial role in the
cross-border acquisition and in teasing superior performance out of it. They deployed key
personnel to integrate the American and Indian operations and help rework Hindalco’s strategic
plans to take advantage of Novelis’s distinctive capabilities.

Executives in the group center played a key

role in Hindalco’s $6 billion acquisition of
Novelis and its integration and turnaround.
To ensure that affiliates are constantly thinking about stretch goals, the group center must engage
with the affiliates’ teams on an ongoing basis. For instance, every major Tata company has a
business review committee—made up of that affiliate’s top leaders and key members of the group
center—that works with it to redraw its horizons.

Shepherding cross-business opportunities.

Some opportunities call for creative collaboration among affiliates. The group center can identify
potential synergies that typically wouldn’t be apparent to individual affiliates and set up
initiatives that foster the exchange of capabilities and ideas. The Tata Group Innovation Forum,
for example, sponsors five innovation clusters in the areas of engineering, information
technology, nanotechnology, plastics and composites, and water. These clusters bring together
managers and experts from companies across the group to share research and technology road
maps and identify joint innovation projects.

Identity work.
A business group’s brand, motto, reputation, and organizational identity are important sources of
value. That’s why identity work—a lever for shaping the beliefs, perceptions, and motivations of
customers, business partners, employees, and talent—is usually an integral part of the group
center’s activities.

Because the affiliates are autonomous and have different aspirations, the center’s first challenge
is to manage the presence of multiple identities. The creation of a robust and meaningful
überidentity that can help executives “think like one group” is crucial to cohesion. The
überidentity will lend stability and continuity to the group as the environment changes and
provide the boundaries within which affiliates can articulate their individual identities. The
Murugappa Group, for instance, has built a corporate brand around the core values of moderation
and helping the community. The group believes that the brand has kept it in good stead even as it
diversified away from its traditional businesses of manufacturing abrasives and bicycles to
making fertilizers and pesticides and, more recently, providing financial services.

A second challenge is that the group’s intangible resources, particularly the parent brand, can be
devalued by affiliates’ actions. Such problems can be prevented only if the intangibles have a
guardian.

The group center’s identity work has three objectives:

Refresh identity.
The center must periodically rejuvenate the group identity and brand. Five years ago the Godrej
Group embarked on a complete makeover of its corporate brand after research determined that
consumers associated it with the image of a frumpy old woman. After studying the group’s
heritage and key business lines, consultants helped articulate a unifying aspirational proposition
—“Brighter Living”—and revamped the Godrej logo to incorporate vibrant colors and
contemporary motifs. This repositioning also led to a new brand architecture, which
distinguished between businesses that were master branded (such as Godrej Properties), platform
branded (Godrej Interio furniture), and endorsed (Real Good Chicken). The Godrej name
dominated the master brands but was used as a prefix to the platform brands and was not part of
the endorsed brands. The platform and endorsed brands are allowed to embody values other than
Brighter Living. That new architecture, the group center felt, was essential to transform the
Godrej brand into a strategic asset.

Safeguard values.
The center should reaffirm the group’s identity in day-to-day workings and manage that identity’s
alignment with key strategic decisions. But the center’s paramount role is to act as the custodian
of values, as Anand Mahindra said in an HBR interview several years ago. (See “Finding a Higher
Gear,” July–August 2008.)

In the late 1990s, the Tata group executive office received a proposal from an affiliate that wished
to produce movies. Senior executives were concerned that movie production, then tainted by the
financial ties some producers had to organized crime, was incompatible with the group’s purpose
of “improving the quality of life of local communities.” Ultimately, the group executive office
decided to turn down the proposal.

Systems that ensure proper communication of the group’s identity and values are critical. The
Tata Group has codified the values that it stands for in the Tata Code of Conduct, which it expects
its affiliates to abide by. R. Gopalakrishnan, a key member of the group executive office, refers to
it as the group’s bible; it provides guidance on the dilemmas and questions that crop up in the
course of business every day.

The Tata Code of Conduct provides guidance

on the dilemmas that crop up in business
every day.
A particularly potent way of embedding values across affiliates is to develop a cadre of key
executives who can be transferred among them. At the Tata Group, a program known as TAS
(formerly Tata Administrative Services) has been nurturing talent since 1956. TAS trains
managers centrally, assigns them to affiliates in keeping with the latter’s needs, and helps them
move up and across companies as their careers progress. Similarly, the Mahindra Group has a
cadre of managers, many of them graduates of India’s leading business schools, that it rotates
through the various companies in the group.

Multiply goodwill.
Systematically channeling resources for socially responsible activities through a group center
increases their impact. A centralized agency that guides and coordinates social initiatives can
generate enormous economies of scope. Take the Aditya Birla Centre for Community Initiatives
and Rural Development. Headed by Rajashree Birla, the matriarch of the Birla family, it focuses
on education, health care, sustainable living, and rural infrastructure development. The center is
setting up a vocational training facility in the state of Kerala, which will begin operating in early
2014. The 23rd facility run by the Aditya Birla Centre, it will provide skills development in
careers such as tailoring, carpentry, construction, and plumbing to around 10,000 people every
year.

Leveraging the Group Center

Business groups in developing nations may be flourishing now, but they could face greater
challenges as the institutional environments in which they operate become more like those in the
United States. Outperforming standalone companies in more-efficient markets will be tougher, as
will retaining a group identity in a global marketplace. To keep groups competitive, group centers
will need to focus intensely on both strategy and identity.

But not all group centers are ready to handle that task. We believe that centers fall into four basic
categories (see the exhibit “How to Assess Your Group Center”). Some pay no attention to either
identity or strategy work; they belong in the absentee landlord category. In our experience, the
long-term survival of groups with this kind of center is endangered unless a charismatic owner
and his or her top management can miraculously compensate for the center’s lack of initiative. A
center that is a clan leader, on the other hand, pays attention to identity work but neglects
strategy work. It sustains the identity that binds the affiliates together and protects the group’s
reputation but shows little concern for coordinating the pursuit of growth opportunities. Lacking
a common strategic vision and unable to get affiliates to work together on new projects, this kind
of center frequently fails to demonstrate the value of belonging to the group. That often raises
questions about the legitimacy of the owner’s control.
A venture capitalist group center conscientiously shapes the group’s strategy, identifying
opportunities and assisting affiliates with resource and leadership challenges. This type of center
doesn’t cultivate and communicate a common identity, however, so it doesn’t energize affiliates
with a collective purpose or support them with a group brand. The fourth category of center is
the evangelical architect—which is committed to both identity and strategy work. Such centers
undertake initiatives that enhance the groups’ performance as well as their longevity.

As the business environment and leadership

How to Assess Your Group priorities change, group centers must evolve,
Center moving from one category to another before
1. Identify Your Center’s Strengths they achieve the right balance. For example,
and Weaknesses
between 1938 and 1991, chairman J.R.D. Tata
Group centers, which oversee all the
held the Tata Group together by sheer dint of
affiliates in business groups, often have
different focuses. To find out what kind of personality. When Ratan Tata took over as
center you have, rate your organization chairman, in 1991, Tata Sons, the holding
on the traits listed below, on a scale from
company, was a passive shareholder that
1 to 6, and then calculate the average
score for each column. exercised little influence over the affiliate
companies.
Scoring scale
1 = Strongly disagree
6 = Strongly agree
After rejuvenating the group’s flagship
2. Determine Which Category Your companies, Tata Steel and Tata Motors, Ratan
Center Belongs To
Tata spent the next few years strengthening the
Plot your two scores on the x and y axes
group’s identity. His initiatives—the Tata Code of
and see which quadrant your center
lands in. Absentee landlords don’t Conduct, the Brand Equity and Brand Promotion
appear to add much value; groups with Agreement, the Tata Business Excellence Model,
this type of center could be under
and the makeover of Tata Administrative
pressure. Clan leaders and venture
capitalists may not be leveraging their Services—embedded a core set of values in
full potential. If your center falls into one everyday work throughout the affiliates. This
of these categories, consider broadening task was coordinated by the newly formed group
the scope to include both strategy and
executive office.
identity activities. The most effective
centers are evangelical architects; they
help deliver the best performance and Later, Ratan Tata and the group executive office
ensure a group’s long-term survival.
complemented the identity work by building
new capabilities for strategy execution: They
developed expertise in cross-border
 acquisitions, formed a business review
committee in every major affiliate, created the
Tata Group Innovation Forum, and launched
other initiatives. Thus, the group executive
office became an evangelical architect.CEOs in
North America and Europe who are managing
business portfolios should take a close look at
how their counterparts in India, China, and
other emerging markets are tackling this
challenge. There’s already at least one sign that

Attention to Identity Work the latter’s approach is spreading. In 2011 the

Agnelli family, major shareholders in Fiat SpA,
___ 1. Employees of our affiliate
companies value membership in the implemented a new plan for accelerating
group. growth: It would break Fiat into two legally
___ 2. Employees of our affiliates always carry business
independent entities, a car company and an
cards with the group logo.
___ 3. A set of guiding principles for employees of all industrial unit consisting of its agricultural
affiliates has been developed and articulated. equipment, construction machinery, and Iveco
___ 4. Senior managers in our affiliates refer to group
truck operations. Fiat is in the process of
principles whenever they confront ethical or strategic
choices. transforming itself from a multidivisional
___ 5. Our group systematically recruits managerial company into a business group. In order to
talent that can be shared by affiliates, in addition to the
generate long-term value, the Agnellis will
recruitment that the affiliates conduct.
probably have to create a group center—just as
___ 6. We conduct group-level competitions for
process excellence, product innovation, and business business groups in emerging markets have done.
creativity.
___ 7. Customers pay a premium in the marketplace for
In a sense, the business group liberates strategy
our group brand.
___ 8. Our group’s reputation carries significant weight from structure. Though structure is supposed to
in the talent market. follow strategy, the former’s limitations seem to
___ 9. We make substantial, recurring investments in
have decided strategy until now. Too often the
developing, communicating, and protecting our group
identity. need to pass up opportunities in order to satisfy
___ 10. Group representatives work with affiliates’ shareholders’ expectations has inhibited
executives to manage any significant engagement with
companies’ growth. A business group,
external stakeholders, such as the government, the
media, or business partners. particularly one led by a dynamic group center,
enables the pursuit of shareholder value at the
___ Identity work average score
affiliate level as well as strategic value at the
Attention to Strategy Work
 ___ 1.Senior managers in our affiliate group level. That makes the business group a
companies habitually consider the
winning organizational structure even if it isn’t
consequences their strategic initiatives
will have for the group. popular in North America—yet.
___ 2. We’ve designated a number of senior group
executives to identify new long-term opportunities for A version of this article appeared in the December 2013
the group. issue of Harvard Business Review.
___ 3. In the past three years, we’ve identified at least
one new long-term opportunity that wasn’t being
pursued by any affiliate.
___ 4. Our group center has specialized management
expertise that it makes available to affiliates.
___ 5. We’ve instituted structural mechanisms to
provide mentoring to senior managers at our affiliates.
___ 6. In the past year, we’ve made up for the financial
shortfall of at least one affiliate by pursuing a new
strategic initiative.
___ 7. We’ve created groupwide platforms to
disseminate best business practices and processes to
affiliates.
___ 8. Directors of all our affiliates interact on a regular
basis in formal and informal settings.
___ 9. We have created mechanisms for developing
new strategic initiatives that involve partnerships among
our affiliates.
___ 10. In the past year we’ve launched at least one
new product or service that synthesized the resources
and capabilities of multiple affiliates.

___ Strategy work average score

J. Ramachandran is a professor at the Indian Institute of Management Bangalore.

J. Ramachandran is a professor at the Indian Institute of Management Bangalore. K.S. Manikandan and Anirvan Pant are
assistant professors at the Indian Institute of Management Tiruchirappalli and the Indian Institute of Management
Calcutta, respectively.

Anirvan Pant are assistant professors at the Indian Institute of Management Tiruchirappalli and the Indian
Institute of Management Calcutta, respectively.
This article is about ORGANIZATIONAL STRUCTURE
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