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What is the Core Business?

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  • Written By: A. Leverkuhn
  • Edited By: Andrew Jones
  • Last Modified Date: 01 December 2016
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    Conjecture Corporation
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The core business for a particular enterprise is the main reason that the company or other entity exists. Some might call it the raison d’ete for a business. Businesses evaluate all of what they do in relation to these business elements that were responsible for the initial founding of the business.

In simpler times, the core parts of a business did not usually have to be identified. A specific enterprise might have operated for one reason, and all of the holdings of that enterprise would have related to that fundamental business purpose. As commerce became more complex over time, however, that same business might have ceased to be identified by just one central operation or activity, as it expanded into other more profitable areas.

The process by which businesses expand into different non-similar operations is sometimes called diversification. A “conglomerate” is a business that has acquired very different smaller businesses, and made them a part of its overall holdings, without coordinating them into a single business unit. Conglomerates or large corporations often are made up of varied parts that do not readily show what the core area or business element is, or originally was. For example, food companies that own and operate non-food businesses may still have food service or agriculture as their core area of business, even if they are not commonly known for those types of business operations.

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In addition to the core business element, some business professionals identify a “core business process” made up of several key steps in the expansion of a business. These might include a market sensing stage where market research is accomplished, as well as a product development stage where the business does research in generating prototypes for various consumer goods. Other stages of the process could include customer acquisition, or the company reaching out to new customers, where the company carefully plans for the accommodation of customers who need help ordering or dealing with their products or services.

Some business professionals feel that a company will succeed partially in relation to how they maintain core parts of business operations or focus expanded operations on a core business element. This kind of assessment is debatable, and in today’s modern world, there are many different ways that companies can order themselves around a core business. In general, many experts who are clued into the growing global commercial world would often say that rapid expansion, acquisition, and change is the first order of business for an enterprise that wants to stay vibrant and competitive.

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