Why does starting a new business division require careful thought and planning?
Starting a new business requires a large commitment of a company’s resources, including manpower and capital expenditures. It’s important to thoroughly research an opportunity when developing a business case and to formulate clear vision, mission and strategy statements. Additionally, a new division or subsidiary should be considered a long-term commitment to customers. Closing a newly opened division or subsidiary carries a high financial cost and decreases consumers’ confidence. What are the advantages of investing in a new division or subsidiary? Starting a new division or subsidiary can have a positive impact on the company’s bottom line or return on investment. Other benefits of new ventures include limiting the entrance of market competitors, increasing brand recognition and mitigating risk of compliance with an industry regulation. What management issues are involved in beginning a new subsidiary? Upper management will need to determine if the new division or subsidiary supports
