diversification strategies and corporate governance
TRANSCRIPT
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Group 8
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Course of DiscussionOrigin and Evolution
Diversification
StructuresCompetencies
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Origins and evolutionBritish companies evolved in the late 19th
century so did the Japanese
Mainly took case of distribution and exportimport
Thrived on local knowledge
Japanese had extensive Government support
but British lackedLater British hegemony die away, Japanese
gained strength
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DiversificationTendency to diversify hardwired into trading
companies
Insurance, finance, transportation, naturalresources and manufacturing were keyinterest areas.
Example companies include
1.Borneo company limited2.Harmisons and Cros field
3.James finlay
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Borneo Company LimitedFounded in 1956
Diversified geographically and product wise
Operated in Singapore, Thailand and MalaysiaActed as distributor for Austin (UK) and
GM(US)
Diversified into Canadian brickworks,
Australian timber.
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Harrisons and CrosfieldFounded in 1844 engaged in tea trading
Geographically diversified in Asia, US, Canada
and Australia.Product diversification Rubber (South Asia),Timber(Borneo), Palm oil, ChemicalManufacture and distribution.
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James FinlayEstablished in 18th as Scottish merchant
Started cotton business Scotland then moved to US and India
Then moved to Tea trading in India & distributed in US, Canada
and Russia in 19
th
century.Then diversified into jute and sugar manufacturing
The company also had unsuccessful diversification into merchantbanking, insurance, properties & oil and gas exploration.
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Structure Type-I
Center of power remained in the Capital city of thehome country
Fully owned host country branches
Structure Type-IISecond organization form was of affiliates
Had less stakes
Used to float after development, provided financeDirectorial level links, senior managers from
parent companyThey provide business to British trading
companies
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CompetenciesCo-ordination competencies
Control by the center
Development of procedure
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Co-ordination
competenciesAbility to coordinate crucial external and
internal activity
Coordination with affiliate company.Overdraft from bank
Good relationship with principals, shippingand insurance company.
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Control by the CentreExecutives with regular operating
responsibilities
Long term working members, bigwigs of bank
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Development of
ProcedureDecentralization of decision making
Japanese followed accounting system to
preemptIndividual profit performance, the root cause.
British resorted bureaucratic rules.
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Thank
You!