Diversification "out of the box" - Roland Berger

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EXAMPLEFrench conglomerate Bouygues is organized successfully as"strategic architect"Role of the centerShare price vs. index [%]> Portfolio of independent businesses with leadingpositions in their markets and aim for long-termorganic growth (Construction: Road works,Building/Civil Works; Property; Telecom; Media;additional stake in Power-Transport Alstom)> Lean corporate center with a simple two-layerstructure (intermediate layer only reporting line with nooperational function)> Corporate center with influence on business unitstrategies (but not on ops)500400300200> Centralization of key functions finance, IT, Legal, HR > Sharing best practices between the businesses100(e.g. contract negotiations, purchasing,communications, human resources) organized in"Group Sustainable Development Department"31.08.199831.08.1999Bouygues31.08.200031.08.200130.08.200229.08.200331.08.200431.08.200531.08.200631.08.2007SBF29.08.2008Source: Thomson financial, Wesfarmers annual report, Press research, Roland Berger46
EXAMPLEAustralian conglomerate Wesfarmers manages businessesunits successfully as "portfolio investor"Role of the center> Full autonomy of business units (homeimprovement, coal, insurance, industrial & safety,chemicals & fertilizers, energy, other)> Active portfolio management with good M&A trackrecord (incl. smart shopping) and deep pocketsallowing for longer-term approach> Performance culture grounded on financialperformance (ROC) measures and value-basedmanagement in combination with risk managementand incentive systems (e.g. stock options)> Strict appliance of corporate governance rules andshareholder value approach> Focus on development of managementemployees (corporate center as pool of talentedresources)Share price vs. index [%]700600500Wesfarmers400300 ASX200100031.08.199831.08.199931.08.200031.08.200130.08.200229.08.200331.08.200431.08.200531.08.200631.08.200729.08.2008Source: Thomson financial, Wesfarmers annual report, Press research, Roland Berger47
Page 1 and 2: Diversification "out of the box"Mun
Page 3 and 4: A. OUR APPROACH -A structured conce
Page 5 and 6: Our modular approach consists of fo
Page 9 and 10: 1.1A proper bottom-up portfolio seg
Page 11 and 12: 1.1BACKUPWrong business definition
Page 13 and 14: 1.3 EXAMPLEThe definition of core b
Page 15 and 16: 1.4ILLUSTRATIVEPortfolio options sh
Page 17 and 18: 1.4ILLUSTRATIVETop-down targets for
Page 21 and 22: 2.1BACKUPThe portfolio logic need t
Page 23 and 24: 2.2ILLUSTRATIVEThe arithmetic for v
Page 25 and 26: 2.2EXAMPLE"Underperformer" business
Page 27 and 28: 2.3RELATED DIVERSIFICATIONIdentifyi
Page 29 and 30: 2.3RELATED DIVERSIFICATIONOdds of s
Page 31 and 32: 2.3RELATED DIVERSIFICATIONIdentifie
Page 33 and 34: 2.3RELATED DIVERSIFICATIONIndicator
Page 35 and 36: 2.3UNRELATED DIVERSIFICATIONConglom
Page 37 and 38: The ability of the holding to contr
Page 39 and 40: Successful organizations design a c
Page 41 and 42: … that vary by the adopted modelO
Page 43 and 44: BACKUPResources needed at the cente
Page 45: ILLUSTRATIVEThe role of the corpora
Page 49 and 50: E. ROLAND BERGER - Our experienceRo
Page 51 and 52: Excellence in strategy consultancy
Page 53 and 54: Our expertsHauke MojePartnerFlorian

Diversification "out of the box" - Roland Berger

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