Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 10 CREATING SUSTAINABLE COMPETITIVE ADVANTAGE
Candidate businesses or individual products for harvesting may be those that are losing 
money despite managerial and financial resources being invested in them, or they may be 
those that are about to be made obsolete due to company or competitor innovation.
Implementing a harvesting strategy calls for a reduction in marketing support to a mini-
mum, to cut expenditure on advertising, sales support and further R&D. There will typi-
cally be a rationalisation of the product line to reduce production and other direct costs. 
In addition, prices may be increased somewhat to improve margins while anticipating a 
reduction in volume.
10.6.5 Divestment/deletion
Where the company decides that a policy of harvesting is not possible – for example, when, 
despite every effort, the business or product continues to lose money – attention may turn 
to divestment, or deletion, from the corporate portfolio (see Figure 10.23).
Divestment – the decision to get out of a particular market or business – is never taken 
lightly by a company. It is crucial, when considering a particular business or product for 
deletion, to question the role of the business in the company’s overall portfolio.
One company, operating both in consumer and industrial markets, examined its business 
portfolio and found that its industrial operations were at best breaking even, depending on 
how costs were allocated. Further analysis, however, showed that the industrial operation 
was a crucial spur to technological developments within the company that were exploited 
in the consumer markets in which it operated. The greater immediate technical demands 
of the company’s industrial customers acted as the impetus for the R&D department to 
Figure 10.22
Harvesting 
strategies
Revenues
Investment
Cash
Costs
Minimise costs, maximise revenues and take
cash out for other projects
Figure 10.23 
Divestment 
strategies
Minimise costs and get out quick!

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SUMMARY
improve on the basic technologies used by the company. These had fed through to the con-
sumer side of the business and resulted in the current strength in those markets. Without 
the industrial operations it is doubtful whether the company would have been so successful 
in its consumer markets. Clearly, in this case, the industrial operations had a non-economic 
role to play, and divestment on economic grounds could have been disastrous. 
Once a divestment decision has been taken, and all the ramifications on the compa-
ny’s other businesses have been carefully assessed, implementation involves getting out as 
quickly and cheaply as possible.
10.6.6 Matching managerial skills to strategic tasks 
These various strategies require quite different managerial skills to bring them to fruition. 
It should be apparent that a manager well suited to building a stronger position for a new 
product is likely to have different strengths from those of a manager suited to harvesting 
an ageing product. Wissema et al . (1980) have suggested the following types of manager for 
each of the jobs outlined previously.