We love to hear about the fantastic stories of growth when firms create and capture huge new opportunities, but strategy is just as important in declining sectors. Anyone out there fancy heading up Kodak’s camera-film business or Blockbuster’s video-rental stores? Finding new growth opportunities is critical, of course [e.g. print-production from digital images] but the imperative to squeeze value out of declining sectors can often contribute considerable value [Fuji, for example, suffered far less in the falling camera-film market than Kodak – a success worth many millions of dollars]. More generally, there’s still plenty of valuable strategy work to be done in declining industries. There can be huge value to extract by leading the competitive rationalisation and capacity reduction that can preserve industry value as leading firms in the European defence sector have found, for example.
But this issue arises on a less dramatic scale all around us. I was just reminded of it by seeing Coca-Cola’s move to acquire for $2.5b Huiyuan Juice who make fresh juice-based drinks. The company is pushing into this direction due to pressures on its core carbonated drinks market. In this case, we are not looking at a headlong decline, but even so, some hero or heroine is going to be heading lines of business for which prospects are neutral at best, or negative. Where do all the high-flyers in such companies want to work? .. in the exciting growth sectors of course!
It would be great to hear of cases where a company makes sure to put top-quality talent on mature product lines.Share