Also, there are some firms which will be performing poorly, in a conglomerate these firms are stressed upon and the management makes them do better. There are three approaches to this strategy: the BTR approach, the Hanson approach and the Minorco approach. We will continue on with the Hanson approach.
The Hanson growth strategy has eight categories on the basis of which it operates. It has been initiated by James Hanson, who has proved that by following these eight principles an organization can be successful. These eight principles are:
The Hanson approach concentrates on the growth of the whole organization, not just one company within the organization. The idea is to generate more profitability than other competitive businesses, have excess cash which can be invested back to acquire more new firms and to pay corporate dividends.
In today's world with so much competition every organization is trying to find performance driven advantages which will help it achieve a competitive edge in the market. A linkage between the business practices and IT will enable firms in achieving this edge. A business should understand three major points: who are the most satisfied customers Which corporate investments will and are yielding the highest returns And which business units have an above average performance Once the answers to these questions have been determined, the strategy can be applied effectively and will yield even better results.
The private sector has readily adopted this principle while the public sector has been hesitant, but is slowly adopting the approach. For the HR, improving performance through pay and motivation techniques is advantageous. According to the Hanson approach, employ managers who are motivated and productive, this way the organization can restructure itself and employ less people who can do the same job, thus reducing costs. A downside to this is that the employees may react negatively to this, make sure that the employees are willing to incorporate performance drivers. As per some case is the "U.S. Office of Management and Budget" (2001), initiated a program for performance improvement that was met with significant opposition by most of the employees.(Risher, 2007)
In a performance driven culture the focus is on the long term growth and profitability of the company, thus the policies adopted and the goals set should be such that benefit the organization in the long run. It is easier to measure individual employee performance in such a culture, thus employees can be given remuneration according to their performance, respectively. Costs are cut down which give the company a competitive edge in the market. Shareholder earnings are maximized, uneconomic activities are let go off and businesses that are doing poorly are divested. In Hanson's approach, James Hanson followed the logic of the market.
There are some weaknesses of this strategy, there is no such investment in research and development. In today's world a company has to be