Partner & Director, BCG Henderson Institute Fellow
New research from The Boston Consulting Group and HHL – Leipzig Graduate School of Management demonstrates that diversified companies perform as well as focused companies but have a measurable financial advantage during economic crises. More critically, the top diversified companies turn this financial edge into a competitive advantage that enables them to outperform their peers and recover rapidly from crises.
These insights, which are based on an analysis of more than 1,100 diversified and focused companies, build on previous findings from BCG’s research into diversified companies. In a December 2006 report, Managing for Value: How the World’s Top Diversified Companies Produce Superior Shareholder Returns, BCG showed that applying the conglomerate discount diversified companies is often unwarranted.
Given today’s uncertain economic climate, all companies should learn from the experience of the top diversified companies and prepare to turn future crises to their advantage.
Market sentiment has swung in favor of diversified companies, which is reflected in the steady decline of the conglomerate discount.
Diversified companies’ superior risk profile gave them a financial edge during the market turmoil.
The top diversified companies turned their financial advantage into a competitive edge.
To excel in the next crisis, companies should follow four key lessons from the top diversified companies.
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