Assessment of Performance Measurement in - St Clements University

Strategic Exit Barriers
Porter (1980) stated that even if a diversified firm faces no exit barriers
from economic consideration relating solely to the particular business, it
may still face barriers because the business is important to the company
from an overall strategic point of view. He thus explained this situation
as:
a. Interrelatedness: The business may be part of a total strategy
involving a group of businesses, and leaving it would diminish the
impact of the strategy. The business may be central to the corporation’s
identity.
Exiting may hurt the company’s relationships with key distribution
channels or may lower overall clout in purchasing. For example in
Nigeria, if Nigerian Brewery should stop producing star larger beer, for
poor performance of the product in the market, it is going to affect the
overall image of the company. Exit may render shared facilities or other
assets idle, depending on whether or not they have alternative uses by
firm or can be rented in the open market. A firm terminating a sole
supply relationship with a customer may not only fore close sales of
other products to that customer but also hurt its chances in other
businesses on which it relied to supply key raw materials.
b. Access to financial markets: Exiting may reduce the confidence of the
capital markets in the firm or worsen the firm’s ability to attract
acquisition candidates (or buyers). If the diverted business is large
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