As someone who has been part of the Pakistani business landscape for the last four decades, I have witnessed the evolution of local businesses from single business entities to diversified corporate groups. In this course, I have seen several of them often face a strategic choice: should they focus on growing their core business or diversify into new areas?

While the diversified conglomerate facades always seem to shine brighter, I have been curious about their chosen growth strategies and whether these have yielded optimal results for them and the country.

To explore this, I examined counterfactual scenarios for a few large Pakistani business groups. I imagined how they might have evolved if they had focused on their core businesses rather than diversifying. This comparison of the actual path with a hypothetical focus strategy draws valuable lessons for the future.

But first, some theory!

While there is no one-size-fits-all strategy, commercial organisations would do well to focus on their core businesses if untapped market potential still exists and the core product or service has room for growth. This could involve expanding into new geographies and different customer segments to improve market share.

The core must remain in focus when you have a strong competitive advantage, unique capabilities, a brand, or cost advantage that can be scaled and expanding the core generates higher or more predictable returns compared to diversification.

Focus builds strength and avoids spreading resources too thin. It also deepens expertise inyour main business.

On the other hand, you would pursue diversification when the core market is saturated or stagnant, growth slows, margins compress, or customer needs shift. When concentration risk is high, there is overdependence on one product, customer group, or geography, which poses long-term risk.........

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