BCG - The Boston Consulting Group

Multibusiness companies have traditionally pursued growth by deploying two basic strategies: expansion of their portfolios through mergers and acquisitions, and organic growth of the individual businesses within their portfolios. Both avenues are proving increasingly challenging. We see tremendous potential in a third option: cultivating organic growth across, as well as within, the company's existing businesses by leveraging capabilities, customers, and scale across the businesses.

The idea that there is a relation between risk and returns is a cornerstone of modern portfolio theory. And yet, the concept has yet to affect the way most companies manage the real assets of the corporate portfolio. It's an enormous missed opportunity. It is possible to integrate a rigorous assessment of uncertainty and risk into the very process of setting portfolio strategy. The result is a far more comprehensive and realistic approach that can fundamentally transform how senior executives manage the corporate portfolio.

In many categories, the top 30 percent of customers generate considerably more than half the revenue and profits. Focusing on heavy spenders makes sense, but real competitive advantage comes with understanding how they differ from average spenders. Why do they choose certain products and retailers over others? What factors close the sale? Answering such questions will help retailers develop a merchandising and promotional strategy that attracts heavy spenders and encourages them to spend more. Cultivate heavy spenders or lose them.

The capital advantage to be gained in RDE-based operations can boost a facility's return on capital by as much as six percentage points—while also generating a host of operational and strategic benefits. These include significantly reduced investment hurdles, fixed costs, breakeven points, and minimum scale; enhanced flexibility; and easier risk management.

Legions of international banks are buying minority stakes in Chinese financial institutions and trying to expand their own modest branch networks in China. They're wagering that China's remarkable economic growth will continue and that further deregulation expected by the end of 2006 will lead to significant new opportunities. The Chinese banking market may be fraught with risks, but it is also a market that few banks with international aspirations can afford to ignore.

Consumers are taking increasing control of what they read, watch, and listen to, as well as how they pay for it. These changes are expected to alter the competitive dynamics for content creators, aggregators, distributors, and device makers. To survive, players must employ the segmentation strategies that have kept consumer goods companies thriving. It will mean shifting from a push model that forces "averaged" media bundles onto the market to a pull model that attracts consumers with differentiated offerings.

China’s red-hot automotive market cooled dramatically in 2004, when passenger car sales increased only 13 percent—sharply down from the 74 percent rise in 2003. This slowing growth combined with falling prices, significant increases in capacity, and a proliferation of new-model launches has turned China into a fiercely competitive auto market—one that is rapidly separating the winners from the losers.

This Perspective focuses on two of the key ideas in Luc de Brabandere’s new book, The Forgotten Half of Change. First, if you want big or lasting change in your company or in your life, you will need to change twice. You will need to change reality and perception—yours and others’. Second, you will need creativity, not just innovation, and in companies you will need to use creativity to develop a strategic vision. The Perspective ends with an 11-point blueprint for developing a vision that can change perception.

Global R&D is making headlines but companies' experiences to date are mixed at best. This article examines why many companies that are already moving are achieving only lukewarm results.

Global R&D is making headlines but companies' experiences to date are mixed at best. This article argues that internal barriers, not external factors, are preventing many companies from moving as aggressively as they should.