Periodic portfolio reviews can reduce the drag on your profit
A report from Deloitte has cited holding onto marginal stores as a key factor in business failures. The logic from this is that having a large number of stores that generate little - if any - profit drags the rest of the business into loss.
It isn't only physical premises that can have a similar effect. Products, customer segments, even national markets can all have a similar drag. Often these are maintained not because data suggests they have value, but because of a mistaken belief that they are in some way important to the overall cashflow.
Periodic reviews of the portfolio (be it products, premises, markets or customer groups) are essential to ensure that the right focus is in the business and to give early sight of potential sources of drag. Where they are identified quick action is required to determine whether the portfolio can be reshaped by closing or reducing non-value add activity.
It isn't only physical premises that can have a similar effect. Products, customer segments, even national markets can all have a similar drag. Often these are maintained not because data suggests they have value, but because of a mistaken belief that they are in some way important to the overall cashflow.
Periodic reviews of the portfolio (be it products, premises, markets or customer groups) are essential to ensure that the right focus is in the business and to give early sight of potential sources of drag. Where they are identified quick action is required to determine whether the portfolio can be reshaped by closing or reducing non-value add activity.
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