Conglomerate Business Strategy
As the world evolves, so does the structure of the business. There are various factors that have influenced contemporary businesses, making them different from those in the past decades and centuries. The main focus of this chapter was the controversy behind the conglomerate structure of a business, the structure of a conglomerate business and the impact of Big Data on business structures in the 21st century.
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Conglomerates and Portfolio Strategy
The chapter on value-adding conglomerates discusses the controversy surrounding the conglomerate structure of a business. A conglomerate is a type of company that manages various companies in unrelated industries targeting completely different types of companies. The text says that these companies have been criticized for their ability to create value. It analyses various conglomerates and evidence of value-creation or lack of it. I think I support the conclusion of the chapter that the burden of proving value, in the end, lies with the conglomerates. Every business is different, and the industries they decide to venture into are also different. The strategies they put into each industry are what matters. I know companies that are succeeding and creating value for their investors while maintaining their conglomerate structures. An example is Unilever, a company whose products are sold in also all parts of the world. This company has been able to diversify this much because of its numerous brands. It currently has over 400 brands in its portfolio, thus bringing in various streams of income (Nazarova, 2015). For instance, in the Unilever case, it is not easy to put adequate effort into the success of every single brand that makes up the company. It is easy for the business’s value to be affected by the underperformance of one unit of the business, thus affecting the value expected by shareholders. Businesses that have decided to venture into one core business have demonstrated that creating a lot of value with a good strategy is possible. Therefore, one can easily question whether the diversification of conglomerates is the right way to invest. Nonetheless, the only thing that can be done is to put trust in the companies to prove that they are able to create value for their investors.
New Organizational Design Challenges
In the text “Organizational Design Challenges Resulting from Big Data,” various relatable factors are brought to light. The text discusses the transformations that have been seen in data management over the past few decades. First, there is more unstructured data that is certainly much more complicated and harder to manage and analyze. In addition, data is now accessible in real-time, and for businesses to benefit from this real-time data, they have to have real-time decision-making. The result of these challenges is a new challenge in designing organizational structures. There is a new need for a power shift to give the experts in data management the role of managing and evaluating the new forms of data so that businesses can benefit from them. They also need to find ways to make their decisions faster so that the data they have can be useful for their businesses.
Looking at how successful contemporary businesses are structured, I believe that a lot of businesses are already aware of these challenges and are doing something about it. For example, Amazon is one of the most successful online companies in the world. Part of this success is the company’s ability to use different data sets about its customers in its decision-making. Information like search histories, payments made, and location are commonly used to enhance user experience. This company already realized the need for the power shift to professional data managers, as seen in the opening of the Amazon Web Services (AWS) unit of the company, where the company’s big data is handled (Varia & Mathew, 2014). The company has been smart enough to even provide the service to other businesses that may be interested. Real-time decision-making can be seen in the user experience of their online shopping website. For instance, when a person buys something, they can immediately get suggestions of other things that they may be interested in based on their real-time experience. Most companies have not been as progressive as Amazon in their new organizational designs; however, it is inevitable that a majority of companies will be late, given the continued benefit gained from big data.
As time progresses, new factors that affect business continue to develop. It is no secret that business structures are changing and will likely change even further in the future. From these readings, it is evident that businesses should always stay on the lookout. A business must ensure that it is not left behind when other businesses are evolving.
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Nazarova, V. (2015). Corporate Diversification Effect on Firm Value (Unilever Group Case Study). Annals of Economics and Finance, 16(1), 173-198.
Varia, J., & Mathew, S. (2014). Overview of amazon web services. Amazon Web Services, 1-22.
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U05a1 Reading Reflection Paper 5
Note: Complete this unit’s first discussion before you start working on this assignment.
The unit readings cover the strategy and organization design of conglomerate and portfolio organizations and the unique organization design challenges and opportunities in the 21st century. Your reflective paper assignment asks you to show your understanding of what you have read and to add your own thoughts and experiences. Completing this assignment will help you activate your new knowledge of organization design.
Reflect on the unit readings. Demonstrate that you remember, understand, and can apply the reading to real-world examples.
Your paper should meet the following requirements:
- Written communication: Written communication should be free of errors that detract from the overall message.
- APA format: Resources and citations should be in current APA format. Be sure to include title and reference pages.
- Length: 3 typed pages, double-spaced pages, not including the title and reference pages.
- Font and font size: Times New Roman, 12 point.
Reading Reflection Paper 5 Scoring Guide
Due Date: End of Unit 5.
Percentage of Course Grade: 2%.
|Explain organization principles and concepts as they relate to conglomerates and portfolio strategies.
|Does not describe conglomerates and portfolio strategies.
|Describes conglomerates and portfolio strategies.
|Explains organization principles and concepts as they relate to conglomerates and portfolio strategies.
|Explains organization principles and concepts as they relate to conglomerates and portfolio strategies, with examples from personal experience or knowledge, or from scholarly research.
|Describe current challenges in organization design.
|Does not list current challenges in organization design.
|Lists current challenges in organization design.
|Describes current challenges in organization design.
|Describes current challenges in organization design, relating them to specific organization design theories or models.
|Apply organization design concepts to a real-world example.
|Does not describe organization design concepts.
|Describes organization design concepts.
|Applies organization design concepts to a real-world example.
|Applies organization design concepts to a real-world example, supported by references from scholarly research.