As said before, company growth is absolutely necessary for surviving in business. Yet, only developing strategies for growing their business portfolios is not sufficient. Instead, the company must prepare and carry out strategies for downsizing as well. Downsizing is as necessary as growth for a sound portfolio planning.
Downsizing means nothing else then reducing the business portfolio. How? By eliminating products or SBUs. The company should eliminate those strategic business units that are not profitable or do no longer fit the company’s overall strategy. For example, the market environment might just change, leading to products or even whole markets that are not profitable for the company anymore. Or the firm might have entered too many international markets and now lacks experience and capabilities. Then, it may be better served by abandoning some SBUs and focus on the most promising ones, to concentrate the limited resources on the strongest products. This does especially hold in difficult economic times. But products or business units might also simply age and die.