"core business"

Core business

The core business of an organization is an idealized construct intended to express that organization's "main" or "essential" activity.

The corporate trend in the mid-20th Century of acquiring new enterprises and forming conglomerates enabled corporations to reduce costs of contracting and other transactions, and enable investors to reduce risks by diversification of business holdings. This trend was reversed in the late-20th Century when corporations began to shed "non-core" divisions and activities. The "unbundling" of the corporation is sometimes a response to the advent of information technology (and its reduction of transaction costs), sometimes a response to the spreading of investment risks enabled by pooling capital in mutual funds and similar investment vehicles, and sometimes the following of a popular trend among corporate management seeking to appear current and impress investors.


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