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Abstract:
Aditya Birla Group is one of the oldest and largest diversified conglomerates of India. It traces its origin back to the tiny village of Pilani in the region of Rajasthan, where Seth Shiv Narayan Birla started cotton trading operations in 1857. Today, the group has 40 companies with 72,000 people drawn from 20 nationalities with 30% of revenues of US$7.9 billion drawn from 18 countries. Kumara Mangalam Birla, the Chairman of the group has been redesigning its operations since 1995 when he inherited the family business at the age of 28. The case describes the evolution of Aditya Birla Group, the group's growth strategy, its rationale for redesigning the conglomerate, internationalising its businesses and managing the change process of a family owned organisation to a professionalised business group that is currently charting its path to becoming a Fortune 500 company. The case presents an opportunity to: (1) examine the evolution of one of the oldest and largest family business houses in India (business families in India); (2) examine the logic of redesigning a diversified conglomerate (strategy); (3) examine acquisition, integration and redefinition to create synergy and value (systems and processes); and (4) transformation of management style and professionalisation of its work force (culture and people). This case raises a set of issues that are being confronted by diversified business groups in emerging markets around the world and provides the data for rich understanding of the strategic, organisational and managerial changes they need to make to respond to changing environments. It discusses the evolution of the Aditya Birla Group. What is unique and interesting in the evolution of such a family business? (Long-term strategy, opportunity, growth and family). It comments on the diversified nature of the group. How can the structure be managed effectively to be in line with its local and international expansion? (Structure). How would you think the organisational culture and administrative heritage should be managed to take the leap from a family business to a Fortune 500 company? (Culture). How can the group overcome the challenges it faces today? (Leadership and people development). What should Mr Birla do now to make his company a Fortune 500 one? (Future outlook).
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