An only company has different activity branches which have nothing in common. This makes management difficult, combines corporate risks unnecessarily and prevents the management from identifying clearly each activity’s profitability, so they cannot make strategic decisions.
Several measures are taken:
- 1.) Splitting up the different business, each one now belonging to a new company distinct from the rest.
- 2.) Setting up a parent or holding company for the corporate group management.
- 3.) Implementing account-management software to improve each company’s cost control and profitability.
- a.) Now each one of the corporate group’s companies has its own manageable risk, so they can prevent the contagion effect if a business does not show the expected evolution
- b.) Each activity has its own manager in each company, so everyone’s duties get clearly identified.
- c.) The account-management software allows a greater visibility of the business’s economic development, making it possible to make strategic decision in a quick way in order to correct undesired deviations.
- d.) This new structure makes it possible to best manage the cash flows for tax purposes, so the investment in new activities and the shareholders’ return get maximized.