Network for Information & Computer Technology: Diversify or Consolidate?
(8 pages of text)
The chief executive officer of Network for Information & Computer Technology (NICT), an information and communications technology implementation firm, had to consider a proposal from India Post in which the latter would leverage NICT’s franchisee-based last-mile customer service kiosks to offer banking solutions to rural areas in India. With the deal, the Post Bank of India would emerge as India’s largest commercial bank. NICT’s network of customer service kiosks was already used in a limited capacity by public-sector banks (the Bank of India and the State Bank of India). The India Post offer could stabilize the financial health of NICT and enable it to venture into new domains. However, its current partners might object to the relationship with India Post and withdraw from their partnership. While NICT had the competencies to serve its current clients, it would need to build new ones for India Post. The CEO had to choose between this emerging, possibly highly profitable opportunity and the existing but less profitable partners.
This case can be used in an MBA-level course either in strategic management or entrepreneurship. It can also be used in executive education programs targeted at senior management or programs designed for entrepreneurs and start-up firms. The case focuses on three broad learning objectives that entrepreneurs, founders, and CEOs face:
- When should a firm focus on scale economies and therefore concentrate on a limited set of businesses, and when should it focus on scope economies and hence diversify into related business domains?
- How can a firm painstakingly build competencies and capabilities that can be leveraged across multiple domains and how can it overcome core rigidity?
- Why and under what conditions does serendipity succeed over planned decisions?
Professional, Scientific, and Technical Services
India, Small, 2013
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