Please Review Innovative Paths that a Corporation can Pursue to gain further understanding.

Supply and demand are worked into every organization and if you take some, you must also leave some in order to be as effective as possible. Whereas I wrote on the importance of an organization continuously innovating and generating new ideas, it is equally important for an organization to look at the areas where it is not of particular strength and decide to abandon that section through selling the business or dropping it entirely. The mentality in corporate America and seeping worldwide is the mentality “that more is better, more products show signs of corporate strength”. This thought can not only strain a corporation’s resources in the present, it can also be a disadvantage the organization in the long run.

There are three core reasons a CEO needs to continuously look at her business segments and decide which areas she wants to allocate resources to with proper abandonment of weak segments:

• Focus on strengths. Weaknesses must be analyzed and admitted, a business cannot be great at everything. What was once great can be tired and worn out within a few years as industries and the economy changes. Procter & Gamble, a successful company that has thrived for over a hundred years in the consumer goods market carefully decides what business sections to invest in. With over forty brands and half of them generating a billion dollars in yearly sales, careful thought is taken on what to promote and improve. P&G could launch twenty more brands if it wanted to, on top of its successful ones such as Crest, Dawn, Duracell, Gillette, Olay and Pampers, but would it be a leader in it’s category? This question is run through a CEO every time a decision needs to be made, and it is the first one to think through.
• Proper wealth distribution. Allocating more knowledge workers, people, advertising, marketing, research and money in general to multiple new business segments can pull away a number one strength for that particular organization. General Motors’s strategy in 2004 - 2007 was focused on the development of larger vehicles such as trucks and SUV’s along with its Hummer brand in order to obtain larger profit margins and North American demand. Unfortunately, with this change and allocation of critical resources to this new direction, Toyota continued its focus on the small car market, and when gasoline prices climbed to over $120/barrel and the U.S. recession in 2008 came full swing; Toyota surpassed General Motors and the other American manufacturers in the automobile industry while General Motors was working on abandoning and closing plants because heavier, gas-guzzling vehicles were no longer the trend. Due to the business structure focused so deep and wide in the larger car market, to suddenly shift into smaller and energy efficient vehicles is like the Titanic moving away from the iceberg a few feet away.
• Less competition that could erode profits and “lower brand image”. In Jack Welch’s book Winning, the former CEO of General Electric describes how in 1981, the company initiative was “Be No. 1 or No. 2 in every market, and fix, sell or close to get there.” His idea of the company holding onto businesses whether they were performing or not “because it was in their history” was revolutionary at the time to the public and to the employees working at General Electric. The primary strategy of becoming first or second place was due to heavy competition from the Japanese in the 1970’s and their commoditization of products within America and worldwide. Jack Welch prided himself and his company on innovation and quality, and “playing defense” in a business that focused on the competitive landscape of consumer goods where GE already was not the strongest was a misallocation of resources. Another disadvantage was General Electric fighting with price, and tarnishing it’s brand of being “lower quality” by participating in price wars with Japanese manufacturers. With this change in strategy of abandonment, GE’s “average” businesses were cleaned up or sold, and people plus assets began to move into the medical, aircraft and power business; businesses that require technological innovation and a larger scope of work that General Electric was best at.

“Fuelling the fire” - optimizing and allocating resources away from weakness and into strengths is a key strategy not only to be ahead of the competition, but work towards reducing and holding back the competition as the “barrier to entry” increases in that industry. Keep in mind however that in order to do that, the corporation needs to make sure it has the right strategy and plan in place, as working efficiently on the wrong strategy will efficiently bring the organization to bankruptcy or a disadvantaged acquisition. Continuously analyzing the corporation's key strengths and weaknesses is a must as what was powerful and performing well today can instantly change tomorrow; and when that change occurs the business must be ready to act.