In contrast the companies that accumulated profits to fatten reserves have seen dilution of their savings as rupee constantly declined, Hyder said, these companies may survive for a while but their failure to invest has made their competitors stronger enough to edge them out of the competition.
Another entrepreneur M I Khurram said some businessmen that excel in a specific sector are reluctant to diversify their investment portfolio even in times when investing in their preferred sector is not viable. While indicating this as a major fault, he said instead of passing on the entire profit to shareholders or increasing reserves it is more advisable to try other investment avenues.
The companies should take cue from a famous saying in business circles i.e. not to put all eggs in one basket, he said, advising that as long as there are opportunities in their preferred sector they should go on upgrading the technology, however, they should constantly look to diversify the investment to shield their company from pressure if one of the sector comes under pressure.
Khurram said that he started a small knitwear unit about 30 years ago, as the exports grew, he continued to upgrade technology and from the capital accumulated, he acquired two sick spinning units, as both have separate cyclic pressures. Now, the sector performing according to aspirations helps to cover the losses of the sector that is under pressure, he added.
Another entrepreneur Nabeel Hashmi said for diversification of investment the entrepreneurs in the country should analyze the fastest growing sector of economy. For instance the sectors that have seen robust growth above the annual GDP fold include financial sector, telecommunication, fertilizer, retail and pharmaceutical. These sectors have registered higher earnings than GDP growth of the country in last one decade. However, he pointed out that few companies in each of these sectors came under pressure because they continued to pay dividends to their shareholders but did not upgrade their technologies.
He advised repositioning portfolio of the business, products and customers is needed to create a mix with a higher potential for growth.
Hashmi said for larger companies it is critical to find proper location to compete. “Choosing the right place means matching its distinctive capabilities to the businesses, customers and products,” he added.