The Flip Side of Profit Centers

The evaluation of a companys product offerings is a two-way affair. Having just looked at the methods of evaluating new opportunities, it is equally important to periodically evaluate existing product lines. A number of factors come into play in this regard, including changes in the market place, changes in technology, the ebb and flow of demand and the related issue of customer preference. One way to view this issue is to use the same four criteria outlined above for new profit centers and apply them to existing ones. The question isnt as simple as whether or not the company would enter the category today if it were not already in it. There may be significant financial impact in exiting an existing business. Nonetheless, there are times when this may be precisely the correct action. It is often too easy for companies to overlook this issue as they concentrate on finding new profit centers; however, with an understanding that both human and financial capital are finite resources, the use of each must be carefully monitored to maximize their effect.