McKinsey & Company - Corporate Finance - Corporate strategy and portfolio reshaping for a diversified manufacturing company

Corporate strategy and portfolio reshaping for a diversified manufacturing company

A major diversified manufacturing company was nearing the end of its rope on adding value through its traditional corporate strategy. Over the past ten years, management had cleaned up a very diversified portfolio of unrelated businesses, and tuned up performance from “bad” to “good”. However, while the company was now more focused and better run, its portfolio of businesses was still too broad—it lacked a unifying theme for compelling value creation—and suffered from a substantial conglomerate discount. Moreover, while its operational performance had gone from “bad” to “good”, the company realized that it would take a much different approach to make the next transition, from “good” to “great”. Our effort had two main objectives:

	To develop a new corporate strategy that would further focus the business portfolio, provide the basis for establishing a conglomerate premium, and establish the corporate infrastructure needed to drive operational performance from “good” to “great”

	To develop and implement a program (including both internal change programs and M&A activity) that would, in three to five years, fundamentally transform the corporation


	The approach: Analyzing the companies competencies

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