How can I assess whther shutting down a particular line of business makes sense? Obviously I would check if it is profitable, but what are other areas to look into? And if it is profitable, can it still make sense to shut it down?
How can I assess whther shutting down a particular line of business makes sense? Obviously I would check if it is profitable, but what are other areas to look into? And if it is profitable, can it still make sense to shut it down?
Hi Anonymous,
there are a couple of different angles you might want to consider here:
All of these aspects should be succinctly outlined and then assessed (either all of them one by one (in order of priority according to your hypothesis), or following guidance by the interviewer).
Hope this is helpful - let me know if you want to discuss deeper.
Cheers,
Sidi
Hi Anonymous,
I think Sidi gave a good answer to address your first question. I would add that the line of business should match the goal of the company: for example, if a company’s objective is to increase revenues and a division is profitable but with low contribution to revenues and high opportunity cost compared to other revenue-enhancing options, it’s not really helping the company to achieve its goal.
To address your second question, I believe there may be two reasons why you may want to shut down a profitable business:
Best,
Francesco
Hi!
I would take a process approach here:
1) Analyze the problem and fix it:
2) Analyze the additional opportunities if can't fix the problem:
3) How to shut down the business if needed?
Best!