Before 1979, in What Ways Did Beatrice’s Corporate Strategy Create Value?

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Taking the investors’ perspective, Beatrice’s expansion strategy of the first years didn’t fully exploit the synergies rising from the acquisitions, creating less value than it could have. Beatrice’s 1940-1979 unrelated diversification strategy was prompted by the wrong reasons, and, given the total absence of synergies in the acquisitions, it probably destroyed value instead of creating value (the investor would have been better-off investing in all the businesses singularly).

Management value decreasing

TAKING THE END OF THE CASE AS A STARTING POINT, WHAT SHOULD BEATRICE’S CORPORATE STRATEGY BE IN THE FUTURE?

The strategy of focusing Beatrice’s activities on its core businesses (food and consumer products), started by James Dutt in 1979, seems the right path for Beatrice. Concentrating management’s efforts only on core businesses, which are related and share synergies, is the best way to realize the full potential of those businesses and, in the meantime, discard those businesses which were not profitable alone. Streamlining the administration and management system will allow to cut SG&A costs, and give a broader view to management, which means better coordination and opportunities exploitation. However, this company reorganization should consider the needs of the unit managers, who were used to have full power over every aspect of the unit: those managers should be employed in high-responsibility positions. Moreover, the reorganization should take time, to train all employees about the new organization and avoid confusion. The huge (and corporate-driven) marketing effort started by Dutt will cause some short-term drawbacks, but in the long run, with fully-exploited economies of scale, it will empower all company’s brands: Dutt’s market-driven strategy should continue.