What is the best strategy for managing an underperforming business unit?
Competitive and market pressures are changing the economics of historically strong businesses. Our approach is to determine root causes of underperformance by comparing the current business to customer needs and competitors’ behaviors. Insights into misalignment with market demands will lead to options for change—for example, business model transformation, targeted investment in product development, cost reduction initiatives, etc. Conditions for business unit success are then compared to other corporate priorities, and strategic decisions can be made about how to manage the unit—grow market share, maintain low share/low growth, or divest business—based on critical factors driving the decision, e.g. risk, investment/return, acquirer interests.