The Aditya Birla Group is one of India’s three oldest multinational conglomerates headquartered in Mumbai, India. The conglomerate has operations in 24 countries and employs more than 120,000 people worldwide. Seth Shiv Narayan Birla founded the company in 1857 (Subramanian, 2010). The conglomerate companies produce viscose staple fiber, metals, cement, viscose yarn, branded clothing, carbon black, chemicals, fertilizers, insulators, financial services, and telecommunications. This paper will provide a swot review of the company, as well as recommendations for future action plans.
Problem and Challenges of Birla Conglomerate
Like any large multinational company, Birla faces particular challenges. The conglomerate’s management encountered the main ones on the way to globalizing the company. Among them, for example, was the spectrum of protectionism in developed countries. This phenomenon was particularly pronounced in the market where Birla planned to enter. The state supported, and national companies did not want to allow outside competition into the market. Protectionism between countries also provided additional challenges. Without the protector’s supervision, a protectorate country could not allow national companies to enter the conglomerate. An additional chain of negotiations was required to solve this problem, which took extra time. In addition to protectionism, the distribution of drugs by the public sector also became a problem.
Nevertheless, the head of the company cites learning to understand each of the businesses in the conglomerate as one of the main challenges. Each of the industrial sectors in which Birla was a part required a different approach to doing business. Because of this, with the opening of each new industrial branch, it was necessary to approach strategy development anew. It was also essential to adopt knowledge from each branch of the company. The operation of a conglomerate is a game in many markets at once, both inside and outside the country, which requires additional training and experience.
SWOT Analysis of Birla Conglomerate
In order to analyze the current position of the Aditya Birla Group, the SWOT framework has been applied. This model explores the characteristics of an entity within the present operational environment from the perspectives of its strengths, weaknesses, opportunities, and threats. In other words, short- and long-term prospects are discussed in addition to the current state of the Aditya Birla Group’s operations in Table 1.
Table 1. SWOT Analysis for Aditya Birla Group
Indian Conglomerate Competition, Value Business Versus Growth Business
Aditya Birla Group operates on a global level, many other companies like itself. Aditya Birla Group’s main competitors are Mahindra and Mahindra, Hexion, USA Rare Earth, Pensana. Nevertheless, Birla’s main competition now is with the Tata Group. Jamseji Tata was the founder of the first steel mill in India, and in the 1950s, his company produced the first national track (Subramanian, 2010). Now Tata trucks are known throughout South Asia. Tata Consult Services (TCS) was established in 1968 and is now one of India’s top five software firms. The Tata Group now has more than 80 companies involved in everything from tea growing to banking. It is also worth noting the competition in the market between value business versus growth business. Growth businesses are those companies that are thought to outperform the overall market over time due to their future potential. Value businesses are those companies that currently provide higher returns. In the Indian model, growth businesses excel because they keep pace with the ever-modernizing market.
The Aditya Birla Group’s SWOT analysis noted that the company has a high dependency and enjoys strong brand recognition and trust from its customers. It has a solid customer base with a strong track record of millions of people from India and from all over the world. The company has a strong logistics base and covers all markets but suffers from a growing number of manufacturers in the same area. With increasing competition in markets such as fashion, chemicals, and finance, companies are trying to win over customers with better marketing efforts. For Birla, the effort must focus primarily on developing the company’s capabilities. Among them are developing its online presence and expanding its customer base with a new influx of customers from additional channels.
The action plan for the company also includes steps to develop its strengths. First, it is recommended to create company’s own website, through which an additional flow of clients will pass. This can be either the site of the conglomerate’s wholesome brand or one general online site. The advantage of the latter option is that customers will be able to get acquainted at once with a wide range of goods provided. The second recommended action is to explore the customer sector that has emerged as a result of urbanization. In other words, it is necessary to study the needs of customers who have moved to the city from suburban areas and have acquired a more comprehensive range of needs.
This way, the company will be able to increase profits through the inflow of additional customers. As another step in the plan, it is essential to develop steps if the threats mentioned in the SWOT analysis manifest themselves. For example, it is crucial to develop a plan to generate additional income in the event of currency fluctuations in foreign markets. In this way, Birla will be able to remain on course in case of unforeseen financial losses.
Subramanian, V. (2010). Birla #1: The “unknown” global Indian conglomerate. Asia Case Research Center. Web.