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Business harvesting

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Business Harvesting

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Business harvesting

  1. 1. Strategic Management Presentation on “Business Harvesting “
  2. 2. Question 1 Is it difficult to attract and retain top talent if one keeps divesting businesses? Substantiate
  3. 3. Answer: Harvest strategy aims at maximizing the remaining profits with minimal or no further investment in the business. Divest strategy aims at either selling off the business unit completely or closing it down. It is because the business unit is making losses and has no further chance to make profits. According to case it is not very difficult to get or attract and retain top talent for a company. Because in today’s life mind set of employees has changed. There is certain thing which they required such as good package, designation, status and compensation.
  4. 4. Answer 1 Conti…. Examples: Reliance retail has hired some managers form some of the world’s largest company like Walmart etc. J&J has chosen to divest one of its division by selling the ortho clinical Diagnostics unit to Carlyle Group. They have gone through this strategy because of slow growth,in order to more go for more lucrative product.
  5. 5. Question 2 Relate BCG’s portfolio planning model to the two businesses referred to in this case and comment on the appropriateness of the decisions taken by Mr. Mathur.?
  6. 6. Answer Mathur Soap pvt Ltd
  7. 7. Answer No. 2, Conti… Relative Market share: Mathur soap privet limited is coming under star category. According to case Mathur Soap Company has 20% market share and other players are up to 5% market share, So our Relative market share is higher than others. They have good name in the institutional market and it was an attractive proposition for any one.
  8. 8. Answer No. 02 conti.. Market growth Rate: In Year 2005 Mathur Soaps turnover of Rs.200 crore. According to given financial data we can see that return on asset (ROA) and return on equity (ROE) ratios are much better. So we can say that Mathur Soap Company is on high market growth rate. According to the Definition of Harvesting, it should come under cow category. But in our case with the some points like he has sold the business in the profit making stage. So we can assume that it is on still growth stage. That’s why it should come under the star category.
  9. 9. Answer 2 Conti… Industrial Gas Plant: Industrial Gas Plant is coming under dog category. We can assume this company will come under dog category from the statement “The product had little differentiation and little brand advantage” Market growth was not so good so that most industrial gas producer in the small scale sector have now turned into mere compressing station Comment He has taken right decision because, Macro environment was changing, which could negatively affect the business.
  10. 10. Question 3 If you were in the position of Mr. Mathur, what would you have done? Justify.
  11. 11. Answer: Financial aspect Balance sheet for the year ended march 31,2005 Return on Equity (ROE) = Net income / Equity shares, 12.88/25.5 =50.50% Higher on ROE is consider better it indicates the company is more efficient in giving more profit to the company compare to other investment like government security, fixed deposit, equity market etc. Return on Asset (ROA) = net income / Total assets , 12.88/ 42.24 = 30% Higher on ROA is consider better it indicates company is more efficient in using asset to generate profit
  12. 12. Answer 3 conti…. If we are in the position of Mathur, with this financial data we can say that company is doing great in their business, so according to us we will not opt the Mathur’s strategy by selling the soap’s business. According to second business (Industry gas plant) there were change in macro environment and high competition Mathur had taken the right decision and we would also like to do the same.
  13. 13. Thank you!

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