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Evaluation of Businesses, Divisions, Facilities, and Dealerships

In: Corporate Restructuring

Author

Listed:
  • David E. Vance

    (School of Business Rutgers University)

Abstract

One of the main reasons companies under perform is that they lose focus. It is rare when any two businesses, divisions, facilities, or dealerships are equally profitable; some are probably very profitable, and some unprofitable. The unprofitable, when averaged in with the profitable can make the overall company look bad. Identification and elimination of losing businesses and facilities can dramatically improve profitability and enhance a company’s chances for survival. One way to think of this is cutting out the cancer, the money losing, and the marginal. Performance measurement is not always easy. Divisions and subsidiaries must be recast as stand alone companies before they can be compared to industry norms. A strategic analysis should consider sales and cost trends. Appropriate strategies for exiting underperforming businesses, divisions and facilities will minimize exit costs and maximize capital recovery. Once under performing units are shed, management time and attention can be focused on improving the profitability and performance of core businesses.

Suggested Citation

  • David E. Vance, 2009. "Evaluation of Businesses, Divisions, Facilities, and Dealerships," Springer Books, in: Corporate Restructuring, chapter 0, pages 67-84, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-01786-5_5
    DOI: 10.1007/978-3-642-01786-5_5
    as

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