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 …show more content…
With this easier structure, now the firm has to take a definite position.
i) A business focusing means that Lonrho will concentrate only on one of the three businesses left.
Sugar represented 6% of Lonrho revenues and 18% of operating profit in 1996, and despite low production costs and an access to a favourable mix of markets, this seems the most suitable for being abandoned, just because is the smallest asset in the company’s portfolio. Lonrho Africa is diversified both geographically and in business lines. With an operating profit of £52 millions, is a valuable segment, but with Tiny no longer in the picture, Lonrho do not have a real Africa specialist. Finally the mining segment is the most important asset for the firm, because represented 22% of 1996 revenue and 41% of operating profit. In my opinion, if the company has to make a choice, this could be the right market to sustain. Some investments are required for Ashanti Goldfields in Ghana and to