6 Trends in Business Expansion for Conglomerates in 2021
The year 2020 was marked by unprecedented challenges that had a profound impact on businesses of all sizes and industries. Despite this, many conglomerates managed to weather the storm and even expand their operations. As we look ahead to 2021, there are several trends emerging that will likely shape the expansion strategies of conglomerates. In this article, we’ll explore these trends and examine how they can help businesses mitigate risks and capitalize on new opportunities.
Trend #1 – Global Diversification
With the pandemic disrupting supply chains and lowering demand in certain markets, conglomerates are looking to spread their risk through global diversification. This involves expanding into new regions and markets, with a focus on emerging economies that offer higher growth potential and lower labor costs. For example, Chinese conglomerate Fosun International has been expanding into Africa, Latin America, and Southeast Asia, while Indian conglomerate Tata Group has been targeting markets like Vietnam, Indonesia, and Bangladesh.
Trend #2 – Digital Transformation
The pandemic has accelerated the already rapid pace of digital transformation, with remote work, e-commerce, and telemedicine becoming the norm. Conglomerates are increasingly investing in digital channels and technologies to streamline their operations, improve customer experience, and gain a competitive advantage. For example, Samsung has been leveraging artificial intelligence and the Internet of Things to optimize its manufacturing and supply chain processes, while Amazon has been innovating with its drone delivery service and voice-activated assistant Alexa.
Trend #3 – Sustainability and ESG
As consumers and investors become more aware of environmental, social, and governance (ESG) issues, conglomerates are under increasing pressure to adopt sustainable and responsible business practices. This involves reducing their carbon footprint, promoting diversity and inclusion, and enhancing their social impact. For example, Nestle has committed to achieving net-zero emissions by 2050, while Unilever has set ambitious targets for reducing waste and increasing the use of renewable energy.
Trend #4 – Mergers and Acquisitions
As the pandemic creates new opportunities and challenges, conglomerates are seeking to consolidate their positions and gain access to new capabilities through mergers and acquisitions. This involves acquiring or partnering with companies in complementary industries or geographies, with a focus on digital and sustainable businesses. For example, Salesforce recently acquired Slack to expand its cloud-based collaboration offerings, while H&M has invested in sustainable textile startups like Renewcell and Treetotextile.
Trend #5 – Innovation and R&D
To stay ahead of the competition and maintain relevance in a fast-changing world, conglomerates are investing heavily in innovation and research and development (R&D). This involves developing new products and services, exploring cutting-edge technologies, and experimenting with new business models. For example, Toyota is investing in autonomous driving and clean energy technologies to diversify beyond traditional automobiles, while Alphabet is investing in moonshot projects like self-driving cars and healthcare.
Trend #6 – Supply Chain Resilience
The pandemic has exposed the vulnerabilities of global supply chains, with disruptions and shortages affecting businesses across industries. Conglomerates are thus focusing on building more resilient and agile supply chains, with a focus on localizing production and reducing dependencies on single suppliers or regions. For example, Apple has been diversifying its suppliers and increasing local production of critical components like batteries and displays, while Walmart has been investing in automated warehouses and last-mile delivery capabilities.
Conclusion
While 2020 was a year of unprecedented challenges, conglomerates showed remarkable resilience and adaptability in navigating the crisis. As we look ahead to 2021, these trends suggest that conglomerates will continue to innovate, expand, and transform their businesses in response to changing customer needs and market conditions. By staying ahead of the curve, they can mitigate risks and capitalize on new opportunities in a fast-changing world.
(Note: Do you have knowledge or insights to share? Unlock new opportunities and expand your reach by joining our authors team. Click Registration to join us and share your expertise with our readers.)