PREPARING FOR A NEW SECTOR

Recently, many major groups and companies have been making preparations to enter new areas. LC Waikiki is planning to enter household textile and cosmetics, while Mudo is getting ready to sell small household appliances and beds under its own brand name.

Capital (Turkey) - - RESEARCH -

WHY A NEW SECTOR?

There are many advantages to entering new sectors or new business areas. Spreading risks, creating synergy between sectors and finding new growth areas are just a few of them… Over the last 10-15 years, many large groups had added new strategic business areas to the main sectors in which they are active. They have succeeded in growing rapidly as a result. One of these companies is Kibar Holding. The holding grew mostly in industry and, by entering new business areas after 2000, it succeeded in increasing its turnover to TL 18 billion. “Entering new businesses strengthened us even further,” says Kibar Holding Board Chair Ali Kibar. “We have recently invested heavily in the automotive supply industry. We have established a real estate company to make the most of the land that we own. Another new area that we have entered is energy.”

THE MAIN TARGET IS TO SPREAD RISK

The Anadolu Group recently bought Migros and entered retailing and quickly increased its turnover to TL 20 billion. Anadolu Group Chair Tuncay Özilhan says that they produce in nearly 20 different countries and have investments worth $2 billion. “Migros took the number of our employees to over 50,000 and the number of our companies rose to 85,” he says. The fact that YDA, which 23 years ago was only active in the construction sector, is now active in eight different areas, ranging from health to agriculture, is the result of an attempt to spread risk. YDA Group Board Chair Hüseyin Arslan says: “The nature of the construction sector means that it is a volatile and disorganized sector. This results in various risks. We entered new sectors outside construction and became more diversified in order to spread our risks.” He adds: “We are both diversifying sectors in order to spread risks and benefiting from the synergy between sectors. Our goal is to create a more balanced and predictable cash flow.”

GROWTH THROUGH DIVERSIFICATION

In order to support growth, large groups and companies sometimes enter new areas in the main sector in which they are active. The main aim here is to secure higher growth through product diversification… Recently, the impact of this trend can be seen in retail and foodstuffs in particular. Leading clothing brands, ranging from LC Waikiki to DeFacto, Mudo and Penti, are looking to enter surprising new areas in the months ahead… LC Waikiki is aiming to strengthen its market leadership by entering new fields, particularly household textiles.

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