Lonrho Plc
An evaluation of Lonrho’s corporate strategy should start from the two main key issues: in what businesses the firm should compete and how corporate headquarter should manage those businesses.
Lonrho’s profile in 1996 included Agriculture, Sugar, General Trade, Hotels, Manufacturing, Mining&Refining and Motor&Equipment. The level of diversification was clearly high and the firm was pursuing a unrelated strategy, with less than 70% of revenues that came from the dominant business (Mining ) and without common links between businesses.
The corporation was divided into country groups or related business lines and each division had a top manager whose responsibilities were similar to those of a group CEO. So the headquarter control of these groups was not very formal and all important decisions were in the hands of Rowland, that used to follow his strategies without consulting the board. Tiny Rowland wasn’t a pure manager but an entrepreneur interested in doing deals, so he made no efforts to share activities or to transfer core competences between different areas. The main interest was to find undervalued assets and try to make them profitable.
Hence we can easily analyse the operational relatedness, since the firm didn’t share either primary or support activities. Corporate relatedness needs a deeper analysis. All these businesses seem to be related by Rowland’s huge experience in conducting affairs and by his effective skill in building relationships with African leaders, pursuing the policy of “investment in people”. But no more corporate-level competences were transferred among Lonrho’s assets, maybe because businesses were too different and Tiny did not want to move key people into new management positions. So from these evaluations, the natural conclusion is that Lonrho’s corporate strategy is an unrelated diversification.
In my opinion the corporate level strategy in itself was good (exhibit 1 and 2: high revenues until 1991), but the way in which Rowland
Lonrho’s profile in 1996 included Agriculture, Sugar, General Trade, Hotels, Manufacturing, Mining&Refining and Motor&Equipment. The level of diversification was clearly high and the firm was pursuing a unrelated strategy, with less than 70% of revenues that came from the dominant business (Mining ) and without common links between businesses.
The corporation was divided into country groups or related business lines and each division had a top manager whose responsibilities were similar to those of a group CEO. So the headquarter control of these groups was not very formal and all important decisions were in the hands of Rowland, that used to follow his strategies without consulting the board. Tiny Rowland wasn’t a pure manager but an entrepreneur interested in doing deals, so he made no efforts to share activities or to transfer core competences between different areas. The main interest was to find undervalued assets and try to make them profitable.
Hence we can easily analyse the operational relatedness, since the firm didn’t share either primary or support activities. Corporate relatedness needs a deeper analysis. All these businesses seem to be related by Rowland’s huge experience in conducting affairs and by his effective skill in building relationships with African leaders, pursuing the policy of “investment in people”. But no more corporate-level competences were transferred among Lonrho’s assets, maybe because businesses were too different and Tiny did not want to move key people into new management positions. So from these evaluations, the natural conclusion is that Lonrho’s corporate strategy is an unrelated diversification.
In my opinion the corporate level strategy in itself was good (exhibit 1 and 2: high revenues until 1991), but the way in which Rowland