Reported in The Star:

“KUB Malaysia Bhd, a listed company may consider selling off its building here, which is one of the five strategic thrusts it has formulated to return to profitability.
The five(5) strategies listed by KUB Bhd’s top management that form the blueprint for transformation are:-

• immediate divestment of non-strategic businesses,

• earmarking companies and assets for fund raising,

• retention and enhancement of selected core businesses,

• venturing into new core activities and

• rationalization of capital.”

Sound very interesting with so many logical strategies for us as financial executives to learn and remember.

However, I believe that the more interesting part is for us to ponder about is this:

To grow big, does a company needs to focus or to diversify.

Quite a number of public listed companies using the injected capital from gullible investors jumped into all sort of bandswagon to transform their companies into conglomerates. Regret to note that we often see many losers in this area of over-diversification. The losers normally accede to their failures by announcing all sort of strategies to cut their cloth within their means or simply to stay alive!
Perhaps one of this is KUB who attempts to grow big by diversifying into various businesses which then now decides to untangle itself from its so-called non-core and non-strategic businesses in order to stay alive:
“ The disposal of companies and assets is expected to raise RM200mil.
KUB will intensify efforts to exit the food and beverage business and the various non-core businesses such as property, engineering and construction, and assorted manufacturing companies. This should reduce losses by about RM13mil yearly.
The group’s return to profitability lies in its proposed streaming of its core businesses to four over the next three to five years. It will encompass information and communications technology, energy, defense and facilities management. The latter two are new business targets.”

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