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Analysis to Make Managerial Decision to Preserve or To Cut Off One of Core Business (Study Case of PT Pos Indonesia)

Virda Aisyah Maulina, Asep Darmansyah

Abstract


Core businesses are those that are central to the main operations of a business organization, where the core earnings of the company are derived from. A core business product or service is strategic in nature and focused on the improvement of customer value. It is also deemed as the “profit center” (Anastasia, 2016). A study argues that company needs to focus on their core business to create sustained growth and profitability (Bain & Company, 2001). Every company has a core business which becomes a main activity from the company. To increase its profitability, company usually has supporting businesses that will help to increase its profitability.

PT Pos Indonesia is a state owned company (Badan Usaha Milik Negara / BUMN) that runs in courier service. It has four segment businesses, they are retail and property, financial services, logistics, and mail and parcel postals. From those businesses, PT Pos Indonesia has core business that is mail and parcel postal. This makes business segment of mail and parcel postal should become center profit of PT Pos Indonesia. As a matter of fact, from the year of 2013 to 2017, the core business segment got loss. According to Posindo financial report, its core businesses do not always give net income. One of core businesses named parceld postal which had loss income for four times during the year of 2013-2017. Seen from business side, a company should cut off business segments which give negative contribution to company. However, in the reality, Posindo doesn’t cut off parcel postal business due to some reasons. Therefore, author conducts the case study to recommend various alternatives to make decision whether Posindo should cut off one of core businesses or not.

 


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