Michel Muszynski

Multi-business from Diversification to Corporate Holding Michel Muszynski

A company is diversified when she runs two or more different businesses. The word ?businesses? can refer either to lines of products or to company?s structure, however ? since in the real world the corporate configuration always reflects company?s market situation - the most distinctive characteristics of diversified companies is certainly a large number of different products they sell. Many actual enterprises are in such case. In USA General Electric with thousands of products, in Japan Yamaha with several different lines of goods marketed worldwide, in France famous Vivendi ? it is easy to find many good examples. The question is how different are these diversified companies comparing to single business enterprises? Does a diversified company has to be managed differently than single product businesses? How to achieve the highest profitability of portfolio of products? Are all portfolio products independent or there can exist interactions between some of them? And are there any rules concerning financing of growing products by those which are in the advanced stages of the life cycle? Finally, separating different businesses of a diversified company leads to building what is called ?holding? organizational structure. Each of components of a holding corporation is an independent company, having a full autonomy, a proper statute, a separate management and very often also separate facilities. One thing is only common: the capital. How to manage this? Do holdings have any sort of advantage against simple diversified companies? This book is for managers working on corporate strategy and for students of MBA programs. It gives the access to exercices as well as to a tool of portfolio analysis downloadable from the Web. TABLE OF CONTENTS for the SECOND EDITION: DIVERSIFICATION 1.1 Higher profits with increased number of products 1.2 Smother evolution of company?s cash flows 1.3 Full exploitation of the market 1.4 A more efficient use of company?s assets 1.5 The risk and the diversification 1.6 Diversify or not? A DIVERSIFIED COMPANY 2.1 Products and their life cycles 2.2 Products interdependence 2.3 Products and their financial margins 2.4 Products and financial flows they generate 2.5 Portfolio equilibrium 2.6 Helping the ?emerging? products 2.7 The evolution of market share 2.8 Portfolio risk and reward 2.9 Managing portfolio 2.10 Adding new products to portfolio 2.11 Organizing a diversified company HOLDINGS 3.1 Why holdings? 3.2 Parent company 3.3 Subsidiaries and diversification 3.4 Financial management 3.5 How much help to provide to subsidiaries? 3.6 Holdings and international operations 3.7 Conglomerates 3.8 Mergers Answering the questions Formulas used in this book Index The author