Sunday, December 02, 2007

Focus Vs. Hedging Risk

I am a regular reader of one of the leading technical blog of blogosphere. Half the times there are news of sell outs and dead pools. ( Companies which wind ). Which lead me to ponder on these points as to what makes a company click focus or hedging risk. Put it in other words does diversification increases risk or does it reduce the risk. Or is it such a simple question at all or is it circumstantial and dependent on the Situation. Common wisdom is having divergent business reduces dependence on recesssion in one sector or vertical and hedges risk. But then it requires Rent of Diversification and that is Management Talent. Different management talent is required to handle more businesses. Much more data is required to be crunched and much more agility has to be shown. The top management needs to be at toe all the times and is required to show endurance in managment, while thinking of the future of the organisation ( Strategic manoeuvres ) and also firefighting the daily or weekly crises which the companies face.

Dozens of books can be written on the subject, what you think, what is your take.

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