Twelve Case Studies of Terminations and Divestitures by Business Firms

by Susan J. Bodilly

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To aid the Air Force in planning for potential budget cuts dictated by the Gramm-Rudman-Hollings Act, this Note considers case studies of twelve firms that have terminated or divested major activities. The study's findings suggest the following conclusions: (1) large organizations have difficulty terminating or divesting major activities; (2) a decision to terminate a major activity is usually made in conjunction with a decision to continue or initiate another activity, tying it to broad questions of corporate strategy; (3) successful corporations viewed termination in the larger context of corporate strategy, while often reformulating that strategy; (4) the strategy provided a context for decisions, not a plan; (5) top management's leadership skills were crucial in initiating, encouraging, and supporting the corporate strategy changes; and (6) termination efforts required the use of nonroutine procedures outside the established budgeting and planning processes.

This report is part of the RAND Corporation Note series. The note was a product of the RAND Corporation from 1979 to 1993 that reported other outputs of sponsored research for general distribution.

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