Vehbi Koc and the Making of Turkey's Largest Business Group
The case describes the creation of Turkey's largest business group by Vehbi Koc. The foundation of this group in the interwar years, and its subsequent diversification into many industries, including automobiles, household goods, and services, are analysed. The case serves as a vehicle to explain why diversified business groups are so important in emerging markets such as Turkey. It explores the role of market imperfections, government policies, and entrepreneurial ambition in their creation, as well as the organizational challenges posed by managing such diversified firms owned by a family. Much of the firm's growth came from licensing and joint venture agreements with multinational firms that were unable, or unwilling, to invest directly in Turkey because of political risk and government restrictions. The case ends in 1988, when the founder has received a report from the management consultancy Bain calling for the firm to reduce the range of activities it undertakes because of the competitive challenges resulting from the liberalization of the Turkish economy.Learning Objective: The case explores the determinants of the growth of large diversified business groups in emerging markets such as Turkey.