Business Environment Is Constantly Changing and Diversifying

¶ … business environment is constantly changing and diversifying and companies need to find the appropriate solutions to create long-term growth and ensure that their core business activity does not become obsolete. A good idea in this sense would be to diversify one's business by prospecting new economic sectors and by creating viable alternatives in other areas. A practice much used nowadays creates new businesses within the mother companies, but serious challenges appear, related to the organization, prospect, evolution and survival of this "intrapreneuring."

Indeed, these new businesses face just as much of the challenges associated with any new business and, besides these, several new ones, associated with their particularities. Their primary condition implies the fact that their initial evolution and creation is strictly related to the corporate culture and the climate of the organization to which they are part of. Organizations where managers are open towards new ideas and creative spirits are more likely to encourage the creation of a new in-business. Further more, these types of organizations will tolerate the initial lack of profitability and invest in the initial research and experiment phase.

Once the new business has obtained the management's vote of confidence, the area of business needs to be determined and analyzed. A new business in a sector closely related to the core activity of the company is more likely to succeed, because it will employ people from the company who are already accustomed with a certain target market and target customers.

Another difficult issue that needs to be analyzed before starting a new business is the relation with the mother company and its management. An independent new business will probably have the initial success, however, in time, it will not benefice from the support of the mother organization. Further more, in the case of independent new businesses within the company, power struggles may occur, to the extent to which the new business becomes a potential rival for the company. In this case, the original goal of diversification and long-term growth is no longer attained.

On the other hand, a new business that does not have a certain level of independence will not be able to put into practice the ideas it has started with and will remain at most a division within the company. The criteria of evaluating a new business should not be represented by the degree to which they conform to the top management's decisions, but by their potential positive effect on the company.

As such, the new business has to find its place in the organizational structure of the company, a structure that already exists, and find the appropriate equilibrium with the company's management.