Internal & External • Denial occurs • Facing serious • Still has not been • The stage of decline is

change that threaten despite signs of problems, & able to deal with irreversible
long-term survival & detoriorating indicators of poor decline effectively • Suffering loss of markets and
may require peformance performance cannot and is facing a panic reputations, the loss of its best
organization to • Creative be ignored • Experience chaos, personnel and capital depletion
tighten up accounting • Leaders are forced by Efforts to go back to
severe circumstances basics, sharp
to consider major changes changes, and anger

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Blinded Inaction Faulty Action Crisis Dissolution

Good information Successful Organizational Performance

Declining Organizational Performance

• Leaders to • Retrenchment
acknowledge decline include downsizing
Develop effective and take prompt personnel Close down the the
scanning and control action to realign org. • Reduce employee org. in an orderly
Solution systems that Indicate with the environment uncertainty by • Only Solution : fashion and reduce
when something is • New problem clarifying values and Major reorganization separation trauma of
wrong solving approach providing information employees

Decline Begins Dissolution

* Source : William Weitzel and Ellen Jonsson, Decline in Organizations

 Subco Portfolio Strategy

“Leader” “Grow” “Still able to compete?”

3.67

“If don’t want to improve,

“Educate Market” “Execute with caution” exit the market”
2.33

“As long as there’s profit” “Still profitable?” “Get out as soon as possible”

3.67 2.33