Mahindra & Mahindra is a case of success in diversification; all others have stumbled at some point
Let’s start with a quick test – from the following three statements, choose the one that's false: Statement #1 – Ratan Tata, K.M. Birla, Anand Mahindra, Mukesh Ambani and Anil Ambani are all men [now, was that a tough one?!]. Statement #2 – Ratan Tata and Anand Mahindra completed their MBAs from Harvard, Anil Ambani from Cornell, while Mukesh was simply a Stanford dropout [now that's an educationally inclined, degree laden lot!]. Statement #3 – All three lead diversified entities and are bearing the brunt of having their tentacles stuck in many cracks on the wall of capitalism. Alright, so going back to our IQ test, which one is false? Well, the first statement is indeed true [again, no controversies here, please], and the second one is not false. So that leaves us to test whether the third one is actually false; well, almost! Confused? By the time you get to the last paragraph, you would have completely understood why our confusion stands justified.
When the going gets tough, the tough get going... Yes, that's a cliché oft repeated to describe how the best and the biggest are able to walk to tight rope under any magnitude of pressure; but in the business game, all except one of the aforementioned names have taken a slip. Factor this: Mukesh Ambani’s retail venture (which includes his petroleum retailing gig), Ratan Tata’s ultra-expensive (a total price of $14.2 billion) Corus and JLR deals, Anil Ambani’s expansion plans and K.M. Birla’s retail and Spice Mobile acquisitions are all facing rough weather! Didn't someone say, "diversification rocks!"? Well, actually, it does... but only if you take Anand Mahindra's case study! So what makes us lay such a strong claim over the unrighteousness of this strategic term? Let’s take the case of Ratan Tata. He bought Jaguar and Land Rover (the two popular brands from Ford’s stable) for a whopping $2.3 billion in March 2008. Today, only a year later, we wonder, couldn't Tata have waited a tad longer? Yes, given the situation that prevails in the auto industry today, he could have captured majority stakes (upto 100%) in giants like the $1 billion worth GM (in terms of Mcap) , which at the moment is reeling under pressures of reduced consumer spending and inflated costs, having lost 98% of its value in a matter of just eight years! Then there is the classic case of K. M. Birla opting to acquire Spice Telecom.
Let’s start with a quick test – from the following three statements, choose the one that's false: Statement #1 – Ratan Tata, K.M. Birla, Anand Mahindra, Mukesh Ambani and Anil Ambani are all men [now, was that a tough one?!]. Statement #2 – Ratan Tata and Anand Mahindra completed their MBAs from Harvard, Anil Ambani from Cornell, while Mukesh was simply a Stanford dropout [now that's an educationally inclined, degree laden lot!]. Statement #3 – All three lead diversified entities and are bearing the brunt of having their tentacles stuck in many cracks on the wall of capitalism. Alright, so going back to our IQ test, which one is false? Well, the first statement is indeed true [again, no controversies here, please], and the second one is not false. So that leaves us to test whether the third one is actually false; well, almost! Confused? By the time you get to the last paragraph, you would have completely understood why our confusion stands justified.
When the going gets tough, the tough get going... Yes, that's a cliché oft repeated to describe how the best and the biggest are able to walk to tight rope under any magnitude of pressure; but in the business game, all except one of the aforementioned names have taken a slip. Factor this: Mukesh Ambani’s retail venture (which includes his petroleum retailing gig), Ratan Tata’s ultra-expensive (a total price of $14.2 billion) Corus and JLR deals, Anil Ambani’s expansion plans and K.M. Birla’s retail and Spice Mobile acquisitions are all facing rough weather! Didn't someone say, "diversification rocks!"? Well, actually, it does... but only if you take Anand Mahindra's case study! So what makes us lay such a strong claim over the unrighteousness of this strategic term? Let’s take the case of Ratan Tata. He bought Jaguar and Land Rover (the two popular brands from Ford’s stable) for a whopping $2.3 billion in March 2008. Today, only a year later, we wonder, couldn't Tata have waited a tad longer? Yes, given the situation that prevails in the auto industry today, he could have captured majority stakes (upto 100%) in giants like the $1 billion worth GM (in terms of Mcap) , which at the moment is reeling under pressures of reduced consumer spending and inflated costs, having lost 98% of its value in a matter of just eight years! Then there is the classic case of K. M. Birla opting to acquire Spice Telecom.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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