Strategies for Weak Businesses


A firm in an also-ran or declining competitive position has four basic strategic options. If it can come up with the financial resources, it can launch an offensive turnaround strategy keyed either to low-cost or “new” differentiation themes, pouring enough money and talent into the effort to move up a notch or two in the industry rankings and become a respectable market contender within five years or so. It can employ a fortify-and defend strategy, using variations of its present strategy and fighting hard to keep sales, market share, profitability, and competitive position at current levels. It can opt for an immediate abandonment strategy and get out of the business, either by selling out to another firm or by closing down operations if a buyer cannot be found. Or it can employ a harvest strategy, keeping reinvestment to a bare-bones minimum and taking actions to maximize short-term cash flows in preparation for an orderly market exit. The gist of the first three options is self-explanatory. The fourth merits more discussion.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Efficiency and Values


The term ‘efficiency’ is a concept that has meaning only in the context of an agreed set of objectives. Such objectives can include objectives about inter-personal distribution, typically reflecting one or other interpretation of equity. Occasions when the goals of efficiency and distribution conflict of the agreed set of objectives does not include equitable distribution. Indeed, historically and still to a great extent, the dominant interpretation of ‘efficiency’ has typically included only the objective of measured economic production/consumption. We should at most call this interpretation ‘economic efficiency’ and not honor it with the label of efficiency in general. But the efficiency label has enormous legitimizing power and functions as a trump card in the modern vocabulary. No one can declare themselves against it. If a policy option is deemed inefficient that usually sinks it. So contenders try to capture the label, to serve their particular set of objectives. This is what business interests and mainstream economists have successfully done for a long time. We need ask: Efficiency by which values?

 

Mainstream economists have focused on growth of aggregate production and national income. Business and other sectional interests may focus on sectional gains but advocate these behind the language of ‘efficiency.’ Not infrequently, the policies behind an efficiency label have been less economic as well as less equitable, and an ‘efficient’ only for elites.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight