While we have seen that a business may have a number of other strategic options, the conventional wisdom suggests that a declining business should either be divested or harvested for maximum cash flow. Under what kinds of market and competitive conditions do these two conventional strategies make good sense? What kind of marketing actions are typically involved in successfully implementing a harvesting strategy?
It makes sense to divest or harvest a product if demand of the product declines significantly. This could be due to technological advances (for instance, the Model T was replaced by more advanced cars) or due to products available with higher quality or at a lower cost. Consider your cell phone ten years ago to the one you have now. It is smaller and better. Demographic shifts may lead to a shrinking market, like in baby food. Needs, tastes or lifestyle changes occur (pet rocks, no carbs, energy drinks). The cost of inputs ...
This solution discusses under which kinds of market and competitive conditions should declining businesses be either divested or harvested for maximum cash flow. It also discusses what kind of marketing actions are typically involved in harvesting strategy. Includes APA formatted reference.