Diversification and Sustainability Are Keys to RGE Group’s Success

The RGE Group of companies headed by founder and CEO Sukanto Tanoto provides a range of natural resources-based products while focusing on strong sustainability measures. However, one may question, why did he choose to offer such a diversified product range?

Mr. Tanoto, a self-made, Indonesian-born entrepreneur, has diversified his RGE (Royal Golden Eagle) holdings to include agribusiness firms such as palm oil producers and distributors Asian Agri and Apical Group Ltd., as well as wood pulp and paper companies Asia Symbol and Asia Pacific Resources International Limited (APRIL). RGE also encompasses the energy development company Pacific Oil & Gas and Sateri Holdings, which concentrates on the production of specialty cellulose, viscose staple fiber, and wood pulp products.

What this diversity of products achieves in practice is a business model relatively safe from market fluctuations in any one segment or industry. At the same time, Mr. Tanoto and his RGE leadership have concentrated on producing ongoing, steady profits for shareholders by avoiding haphazard cycles of expansion for expansion’s sake.

RGE as a diversified company

A Boston Consulting Group report published in 2012 pointed out that diversified firms demonstrated the best structure for weathering the recent global economic downturn. After analyzing more than 1,000 tightly focused and diversified firms, the report’s authors found that the diversified companies were at least as able as their counterparts to stay afloat during tough times, and often showed superior competitiveness and recovered more quickly from downturns.

Through RGE’s “triple bottom-line” philosophy, its constituent companies focus on “people, planet, and profit.” Mr. Tanoto and his executive staff work to serve as corporate leaders in delivering profits, and they strive to stay mindful of the fact that environmental sustainability and the welfare of local communities are key components of achieving that profitability. Currently a $15 billion corporation with approximately 50,000 employees and manufacturing and production sites in Southeast Asia, China, and Brazil, RGE Group concentrates on efficiency, quality output, and conservation of energy and environmental resources.

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