Discover Harvest Strategy’s role in enhancing short-term profitability. Perfect for firms optimizing return from non-core units.
What Is Harvest Strategy?
When future growth appears doubtful or not cost-effective, companies want to harvest as much as they can from the product. It limits additional investment and expenses and maximizes short-term profit and cash flow.
When a company adopts a harvest strategy, it deliberately sacrifices its market position ‘in return for near-term cash flows or current profitability.
The company’s intention in such a strategy is to earn immediate cash from the existing business and use the cash in other more profitable business activities.
Usually, a diversified company with various business lines deploys a harvest strategy (also known as endgame strategy or asset reduction strategy) for non-core business units in weak competitive positions.
What Is Harvesting Strategy?
When future growth appears doubtful or not cost-effective, companies want to ‘harvest’ as much they can from the product.
It limits additional investment and expenses and maximizes short-term profit and cash flow. When a company adopts a harvesting strategy, it deliberately sacrifices its market position ‘in return for near-term cash flows or current profitability.
The company’s intention in such a strategy is to earn immediate cash from the existing business and use the cash in other more profitable business activities.
Usually, a diversified company with various business lines deploys a harvesting strategy (also known as end-game strategy) for non-core business units in weak competitive positions.