Case Summary RM-4

Finding Your Next Core

Business
by Chris Zook.
SYNDICATE 4 :
ALV I N LU F T YZA R P RA KA S A (29 1156 82)
ALV I N P R A JN A T O JI D
(29 1157 21)
H A LID A H I LD A
H.
(29 1157 32)
H E R LA MB A N G P RA SET YA
(29 115 658 )

Main contribution
Changes the core business of company :
- Identified the right time
- How to change the core business

Key Points
Approach :
Recognize when its truly time to find a new core
Examine the companys hidden assetsneglected businesses
undervalued businesses, untapped customer insights, underexploited capabilities.

Unexplored customer insights

Latent capabilities.

Reason of Change Core of Business

Targeting a shrinking profit pool

A new rival has entered the field unburdened by your cost structure
growth formula isnt sustainable.
The business is losing potency, remake the core gradually.

Key Points
First step is re-defining current core business : the state of our core
customer, differentiation, industrys profit pools, capabilities, culture
and organization.
Elements of successful core-redefining :

gradualism during transformation,

The discovery and use of hidden assets
Underlying leadership economics central to the strategy
move from one repeatable formula that is unique to the company to another.

Hidden assets may have the power of market leadership: finding a

subcore of leadership buried in the company and building on it in a
focused way created something that started smaller than the
original combination but became much bigger and stronger.

Key Points
7 Steps to have a new core business
1. Define the core of your business and reach consensus on the true state of the
core.
2. Assess the cores full potential and the durability of its key differentiation.
3. Develop a point of view about the future, and define the status quo.
4. Identify the full range of options for redefining.
5. The core from the inside and from the outside.
6. Identify your hidden assets, and ask whether they create new options or
enable others.
7. Use key criteria (leadership, profit pool, repeatability, chances of
implementation) in deciding which assets to employ in redefining your core.
8. Set up a program office to help initiate, track, and manage course corrections

Questions for discussion

What is the common roadblock that company will face if
they change their core business?