Story- Build Your Niche and Dominate it
Siddhartha Lal was 30 and had just taken over as COO of Eicher group. The group had a diverse spread of about 15 businesses including tractors, trucks, motorcycles, components, footwear and garments, but none was a market leader.
Lal undertook an intense portfolio analysis and took a hard call. He decided to divest 13 businesses and put all money and focus behind Royal Enfield and trucks, two businesses where he believed the group had a genuine shot at leadership. “In my mind the basic question was this: do we want to be a mediocre player in 15 small businesses or leaders in one or two businesses,” recalls Lal.
“That’s why we sold 13 out of the 15 businesses, the big one selling tractors to TAFE. We removed the clutter and focussed on two promising businesses.” Back then, conglomerates viewed businesses as family jewels. It was a cardinal sin to sell anything. But Lal sold almost everything. “Many did think Eicher was going out of business,” recalls Lal. “Motorcycles was the joker in the pack,” says Lal, referring to the portfolio of businesses he inherited. It was also his pet business. “I did the mathematics, projections and all we needed was to get the motorcycle business to the next level (in terms of sales).”
Decision made, Lal put his full weight behind Royal Enfield and the trucks business. Today, Eicher Motors is valued more 83,000 Crores with handsome profits. Royal Enfield brings in about 80% of these profits.
Learning from the story
1. Understanding 80/20 principle is easy, acting in line with 80/20 principle on your business is courageous.
2. Focus helps channelize our resources in one direction creating massive results.
Questions to ask ourselves
1.What is 80/20 principle?
2.How does it apply to my Business?
3.What all steps Royal Enfiled took to make their Business Profitable & Valuable and how do I learn to do it for my business?
If you really want to get answers to above questions, I invite you to my 4 hour Seminar.
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