Associated British Foods: Corporate structure, parenting and portfolio management.
Associated British Foods is a diversified international food, ingredients and retail group with sales of £13.3bn, and 113,000 employees in 47 countries across Europe, southern Africa, the Americas, Asia and Australia.
Results for 2012/13 exceeded expectation. In generally difficult business environment revenue increased by 9%, adjusted operating profit was ahead by 10% and adjusted earnings per share were up 13% on the previous year. (ABF Annual Report 2012-13).
Over the last three years the ABF share price has outperformed the FTSE 100 share index and other listed food producers. (http://www.abf.co.uk/investorrelations/share_price_information/performance)
1. Using appropriate frameworks assess the diversification of Associated British Foods and discuss the logic of the portfolio. 35 marks
2. Assess the nature of the corporate parent; what is the role of the ABF parent and how does the interaction between parent and operating companies contribute to the success of the group? 35 marks
3. Considering the long term history of ABF and key management figures, can you suggest, in addition to a portfolio rationale you have already discussed, a justification for the inclusion of Primark in the ABF portfolio? 10 marks
4. How does the development of Associated British Foods reflect the historical perspective of corporate diversification as discussed by Goold and Luchs (1993)? 10 marks
Up to ten marks will be awarded for the executive summary and the overall standard of presentation, (including correct Harvard style referencing). Exceeding the word count will incur a 5 mark penalty.
A starting point for the assignment will be to research Associated British Foods:
And then to read: Goold, M. And Luchs, K. (1993) Why diversify? Four decades of management thinking. Academy of Management Executive, 7(3), pp.7-25
Only a soft copy of the report needs to be submitted, with the word count listed on the front page. It should be a professionally written business report, suitable for presentation to a management team. You could envisage this as a report for potential investors that will explain the nature of the firm to help them reach a decision to invest or not. (You are not required to present financial forecasts to quantify the potential of an investment).
• Integrated and systematically structured report.
• Effective application of relevant concepts.
• Sound strategic analysis.
• Good linkages between sections.
• Relevant credible data sources appropriately referenced. (eg FT, Economist, Company Reports & Accounts, industry reports)
• Maximum 2000 words (executive summary, list of contents, introduction or appendices are not included in the word count). within the report use the frameworks such as the Boston and ansoff matrix as well as other related frameworks. Also use the uploaded files to help answer the questions as well as the abc website and other business related articles and sources