Is here typically used the concept of heart of activity

The time of the widely diversified business seems irrevocably gone. When it reflects in the seats of large firms to strategic portfolio, it is most often to focus on the core business. He was in was not always thus. Enterprises in particular have long been widely diverse, in a perspective of risk diversification. Activities in different sectors, in different phases of their life cycle, can lead to a better smoothing of profit fluctuations and a system of cross-subsidies. Since the beginning of the 1990s, this diversification strategy is increasingly called into question, because it has substantial drawbacks. Due in particular to continues to market globalization, appear in a large number of segments of the companies in a particular area, were able to take advantage of economies of scale and scope as well as benefits of the experience curve, constituting this fact of daunting for diverse companies competitors. In addition, the disadvantages of internal complexity high inherent in a very heterogeneous business development have led to what occurs for some time in the business a trend towards the specialization on a small number of areas.

Whether on what types of activities a company must specialize and possibly what are the elements of its portfolio it has RID is of paramount strategic importance. Is here typically used the concept of heart of activity. Activity and the growth of the company to perform in fields of activity closely linked to the core competencies of the company. The favourable effects on costs including adds the potential benefits of specialized knowledge.

Focusing on the heart of activity is also the subject of broad discussions in the management literature. In contrast with the favour enjoyed widely this strategy, specialized empirical studies do not confirm the thesis that a focus on the heart of activity is the best of strategies. A quick look at the world of companies also shows that the number of profitable enterprises are widely diversified. A good example is that of EasyGroup, which defines itself as "umbrella company" and is widely diversified in areas such as airline (EasyJet), digital music (EasyMusic) or services (EasyPizza, EasyHotel). Business Internet such as Yahoo! or Google are in the highly diverse past due to insufficient profitability of their heart of activity. Yahoo! is thus entered the market with the acquisition of HotJobs job search; Google is committed on the market of desktop applications with its service online "Docs and Spreadsheets." But it is also tradition such as Franz Haniel & Cie companies. GmbH which consciously allocate their growth in several sectors to diversify their risks. With its five branches of activity organized decentralized manner, the Haniel group conducts in 40 countries a turnover of 26 billion euros in the pharmaceutical distribution (Celsio), health hygiene (HTS) or even construction materials (Xella), sectors in which it is without exception of the leading positions on the market.

But why the strategy of focusing on the heart of activity is in a dominant position, while there are a substantial number of companies which, explicitly, adopt a strategic positioning opposite Serious economic analysis course here can play a role, but it is doubtful that this is the determining factor. There are a series of empirical studies that lead to the conclusion that an also popular strategy is largely explained by an imitation behavior. Imitations of strategic decisions may, for example, occur when there are "cascades of information": businesses then sometimes make decisions contrary to their own economic analyses and forgo their own information because they assume that those who move the first have superior information. Financial analysts also play an important role as "leaders of fashion". That is why it was often assumed during the bubble of the Internet that the leading analysts of the subject had superior information justifying their optimism on the future of number of companies in the sector.

The test of legitimacy is finally a major source of explanation of the Mimetic processes: companies imitating strategies, structures or practices which are institutionalised in society and are more really questioned next to their relevance or effectiveness. The wide use of the BCG matrix as a strategic management tool can be largely explained by institutional influences. The weight of the business schools American here played an important role, which itself was reinforced by a series of publications based on this methodology. Following such institutionalization, observed a sharp increase in the number of growth strategies based on new markets and products among users of the BCG matrix.

But other strategies such as, for example, focus on the core business are part of practices which are not questioned. Companies that mimic these strategies are source of conformism, to get a social legitimacy and ensure the resources they need. It is important to note here that institutionalization of some strategies may initially testify in their economic superiority. There are often in contrast to the myths of rational behavior, which the application is not called into question but whose economic efficiency is largely unreliable.

How is it that certain strategies or practices to institutionalize that may be not the most effective Consultants, financial analysts or other contractors of knowledge as, for example, professors of business schools, are important actors in the process of institutionalization. Companies such as McKinsey and BCG Council leaders develop, for example, specific methodologies and implement them in their activity of Council. Company officials can then demonstrate their willingness to progress by showing that they do not manage their business with "obsolete concepts", but rely instead on modern methods of management. Most of these concepts are used, less relevance is questioned: they will eventually be considered as "ranging from itself".

In this process of internationalization, rating agencies play an important role, especially for touring companies to capital markets. The rating agencies function can be of course reduce the inefficiency of information that exists on the capital markets, and is not itself open to criticism. They assess the creditworthiness of issuers of debt and communicate this information to the market. They certainly do not serve the market through neutral information, but have however managed to establish a design capacity of borrowing widely recognised by the (institutionalization) capital market. In the assessment of solvency, it is not only the structure of balance sheet which is assessed, but also the strategic positioning of the company. Rating agencies expect companies that they work in accordance with industry standards and behave in strategic material in an appropriate manner. Companies whose strategies deviate visions of rating agencies face a less positive assessment that can go up to a downgrade. By contrast, a behavior of imitation, as an adaptation to the institutionalised strategies, led not only to enhanced image advantage. Much more, this behavior is in its effects in quite rational it satisfied shareholders, and the company is itself a lower risk for less good performance because, is finally not worse than "the other".

The focus of growth on the core business of the company can no doubt be regarded as a strategic positioning today strongly institutionalized. Many big companies such as TUI, Daimler-Chrysler, Mannesmann and Thyssen-Krupp are separated in the last years "of marginal activities", to focus on their core business. Often in these cases, the success expected of this repositioning are not demonstrated or remain hardly measurable because of the complexity of the business. What are the consequences for the management of such institutionalization of practices and strategies On the one hand, a strong institutionalization reflects the need to meet certain standards and active management of expectations. On the other side, it makes sense from a strategic perspective to be fully aware of the assumptions which "are self-evident" to expand the range of structural and strategic options