A company’s core business is its main reason for existence, but as businesses expand and diversify, it may become harder to identify. Some experts believe that maintaining a focus on core operations is important for success, but others argue that rapid expansion and change is necessary for competitiveness.
The core business of a particular company is the main reason for the existence of the company or other entity. Some might call it a raison d’ete for a company. Companies evaluate everything they do against those business elements that were responsible for the initial foundation of the business.
In simpler times, the core parts of a business usually didn’t need to be identified. A specific company may have operated for a reason, and all of that company’s assets would relate to that fundamental business purpose. As commerce has become more complex over time, however, that same business may have ceased to be identified by just one core operation or activity as it has expanded into other, more profitable areas.
The process by which companies expand into different, dissimilar operations is sometimes called diversification. A “conglomerate” is a business that has acquired very different smaller businesses and made them part of its overall holdings, without coordinating them into a single business unit. Conglomerates or large corporations are often made up of assorted parts that do not readily show what the main area or business element is, or was originally. For example, food companies that own and operate non-food businesses may still have food service or agriculture as their core area of business, even if they are not commonly known for these types of business operations.
In addition to the core business element, some practitioners identify a “core business process” made up of several key steps in growing a business. This can include a market sensing stage where market research is carried out, as well as a product development stage where the company conducts research into prototyping various consumer goods. Other steps in the process may include customer acquisition or the company seeking new customers, where the company carefully plans to accommodate customers who need help ordering or dealing with its products or services.
Some business professionals feel that a company will succeed partially in terms of how it maintains core parts of business operations or focuses expanded operations on a core business element. That kind of valuation is debatable, and in today’s modern world, there are many different ways companies can organize themselves around a core business. In general, many experts who understand the growing global business world often say that rapid expansion, acquisition and change is the first order of business for a company that wants to remain vibrant and competitive.
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