Divestitures: Creating Value Through Strategy, Structure, and Implementation

CHAPTER 2

Improving Corporate Focus

INTRODUCTION

Corporate strategy refers to the process by which companies build and run portfolios of businesses to maximize profitability and shareholder value. Value is created when a company’s businesses mutually reinforce each other by drawing on common resources and capabilities, using similar inputs, sharing corporate functions, serving overlapping customers, or otherwise creating synergies by being part of the same corporate household. Divestitures are a tool to remove business units that detract from—or fail to contribute to—these objectives, the expectation being to improve the company’s focus on its remaining operations and to enhance its corporate performance. This chapter discusses the strategy ...