Increasingly in the 2010s, corporations turned to divestitures and spinoffs to streamline their operations. Over the course of one week in November 2021, conglomerates General Electric, Johnson & Johnson, and Toshiba announced plans for separation. The news reflected the broader shift toward divestitures as a means to focus on core competencies and achieve growth. By that time, more than three-quarters of companies (78%) believed that they should have divested assets sooner, as opposed to just 41% of companies in 2016. Further, 76% of companies anticipated that the Covid-19 pandemic would increase divestment plan momentum. This case explores the rationales for and against spinoffs, and provides recent examples of companies that followed their spinoffs with consolidations (and vice versa).

In 2017 Edward Jones, the largest brokerage firm in the U.S., is deciding whether and how to implement a new "solutions" business model to replace its traditional "product" or "transactional" approach. Many of the required changes appeared to violate some of the tradeoffs that had made the previous approach successful. Was this the right way forward for Edward Jones? Where did this leave the classic strategy with its reliance on the one financial advisor office as the sole channel of distribution?

Mickey Mouse, Snow White, and Buzz Lightyear strolled down Main Street at the grand opening of Hong Kong Disney in the Fall of 2005, pausing to snap selfies with enthusiastic children in their Mickey Mouse ears. Bob Iger, newly appointed CEO of The Walt Disney Company proudly watched the parade go by, but concerned for the future of the global corporation, he turned to colleagues and asked, "How many characters in this parade were created by Disney in the last ten years?" There was one. But the languishing Disney animation department was not the company's only problem. Disney was under pressure: the company had recently delivered poor financial results; ratings at the ABC network had fallen below competitors; Walt's nephew, Roy E. Disney, had stepped down from the Board after expressing his displeasure with the direction of the company under Iger's predecessor, Michael Eisner; and Comcast had made a $54 billion hostile bid to take over Disney only one year before. The situation for Disney looked bleak. Yet by December 2015 the tide had turned (Exhibit 1). The much-anticipated Star Wars: The Force Awakens was set to become the highest grossing film ever in the U.S. and earn over $2 billion worldwide. Frozen had just surpassed $1 billion in box office to become Disney animation's biggest success ever. In live action movies, Disney franchises, like Pirates of the Caribbean and Marvel's Iron Man, had produced multiple blockbuster hits. ESPN, ABC and other cable and broadcast properties were producing record profits. Attendance was up at Disney parks and cruise ships, while the Shanghai Disney Resort, the company's third and largest theme park in Asia, was scheduled to open in June 2016. Iger thought back to the Hong Kong Disney parade, reflecting on how far the company had come and the lessons he had learned about reawakening the Disney magic.

Co-founders Julie Rice and Elizabeth Cutler have grown SoulCycle from a business idea in 2006 to a major presence among urban boutique fitness studios in 2015. In March 2015, fitness company Equinox approaches them with an offer to buy them out. Evaluating the offer requires an assessment of market or industry attractiveness and of SoulCycle's (potential) competitive advantage.

When Joe Jimenez became CEO of Swiss-based Novartis in 2010 replacing longtime CEO Dan Vasella, he assumed control of one of the top pharmaceutical companies in the world. Vasella, an avowed advocate of diversification, had expanded the scope of the company and structured it into sixteen distinct business units ranging from animal health to oncology while "actively fostering competition between those divisions for resources." Shortly after assuming his position, Jimenez initiated a strategic review that sought to concentrate the portfolio on businesses where Novartis could be at global scale in attractive markets. Rather than following competitors, like Pfizer, in a single mega-acquisition, Jimenez and his M&A team decided to achieve this goal through targeted transactions, or "precision M&A". By 2014 after examining twenty or so possible deals, the company was in the process of negotiating a multi-billion dollar asset swap with Glaxo-Smith Kline (GSK) that was unprecedented in the pharma industry. Although Novartis would improve its position in oncology by acquiring GSK's promising drug portfolio, it had to sell its vaccines and animal health businesses, while giving up control of the over-the-counter (OTC) business. Jimenez and his team knew the offer was "all-or-nothing" and struggled over whether to accept it, or reject it and move in another direction.

In March 2016, BP disclosed that its Chief Executive Officer, Bob Dudley, would receive a $19.6 million compensation package, a 20% increase in total compensation over the previous year. BP justified the amount, emphasizing that the company delivered strong results despite an exceptionally challenging environment, which included a nearly 50% drop in oil prices. However, shareholders questioned the massive payout and ultimately rejected BP's remuneration report in April 2016. Was BP right to give a generous pay package despite the industry slump? Or was it "unreasonable and insensitive," as shareholder Royal London Asset Management claimed?

When Jamie Dimon took over as CEO of JPMorgan Chase & Co. (JPMorgan Chase) in 2005 he reaffirmed the commitment to pursue a "Universal Bank" strategy - providing a full range of products and services to both retail and wholesale clients. Yet the merits of the universal bank had long been disputed. After 2008, the Financial Crisis and subsequent Great Recession damaged many global and domestic financial services firms. While the Government bailed out universal banks and monoline financial institutions alike, both governments and public clamored for action against banks they deemed "too big to fail." Regulators around the world stepped in to increase capital requirements while the U.S. government passed the Dodd-Frank bill, which improved transparency and accountability, and, with the Volcker Rule, limited banks' ability to pursue proprietary trading. In response, many financial institutions reduced their scope and reshaped their portfolios. In this context, JPMorgan Chase, the largest bank in the U.S. by assets since 2011, which had successfully weathered the financial crisis in part due to the benefits of diversification, emerged with a ""fortress balance sheet" and an improved position in the banking league tables. Nevertheless, the bank faced pressure from many directions, including large civil fines to settle, analysts' arguments about its "conglomerate discount," and regulation that penalized size, interconnectedness and complexity. Despite the pressure, Jamie Dimon remained vocal in advocating for the value of a broad scope, large scale financial services firm. However, questions remained about the optimal scope of the bank, and how JPMorgan Chase could best allocate resources across its diverse lines of business in the face of new regulations designed to limit size and complexity.

By 2015, there had been an upsurge in activist shareholders arguing for radical changes in companies' corporate strategies. Personalities like Carl Icahn, Bill Ackman, and Daniel Loeb were feared and loathed in some quarters, celebrated in others. With nearly $120 billion in assets under management in 2014, and big players like Icahn Enterprises managing $22.3 billion, Pershing Square managing $13.4 billion, and Third Point managing $8.3 billion, activist hedge funds had become a prominent feature of the corporate landscape, escaping some of their earlier approbation as corporate raiders or, even worse, "greenmailers." Activism covered a range of approaches-from proxy votes and demands for Board seats, to full blown takeover attempts-and sought to pressure changes on a wide range of issues-from corporate governance and executive pay, to strategic direction and excessive corporate overhead. Yet one of the most common concerned the scope of the corporation. In many cases, activists demanded the splitting up of the corporate entity, or the spinning off or sale of part of the company to another owner.

Beth Wozniak, President of Honeywell Environmental and Combustion Controls (ECC) at Honeywell International Inc., spun around in her office chair, reflecting about how the classic, mature thermostat industry was rapidly evolving. In February 2014, Google paid $3.2 billion to acquire Nest Labs, a new startup whose goal was to reinvent unloved home devices, such as thermostats and smoke alarms. Their smart thermostats posed a threat to the traditional thermostat business, and it was essential that Honeywell determine the best way to respond. In addition to selling thermostats, Nest had ambitious plans to facilitate connections between Nest and other companies, making it easier for consumers to save money and energy. Many companies were developing smart, connected products that could be controlled remotely. But who really wanted to check ten different apps to make sure the heat was down, the doors were locked, and the lights were turned off? The Internet of Things (IoT) redefined the potential of industries, allowing a company that created a smart, connected product to develop an entire system of products that worked together. How would Honeywell, the mature, industrial company in a basic, mechanical business, compete with the new startup bought by Google and developing its own ecosystem - notably giving away thermostats to AirBnB in return for selling data to utilities?

In February 2014, Facebook announced the acquisition of WhatsApp for $19 billion. WhatsApp, founded in 2009, was a relatively young company that employed only 50 people and earned merely $10 million in revenue in 2013. It was one of many mobile messaging services that allowed users to contact each other without paying costly text message fees. However, its popularity and growth potential enticed Facebook, a company facing many challenges and looking for opportunities to expand its user base. Facebook, the social networking website that allowed users to share information with friends, believed WhatsApp was a logical next step that would help it achieve its mission of "making the world more open and connected." When Facebook announced the acquisition, it vowed to keep WhatsApp operating independently, letting the founders control the direction of the company and allowing WhatsApp to stay true to its mission. Yet, many debated the logic behind paying so much for such a small company with limited revenue streams. Was Facebook correct to purchase WhatsApp? Even at $22 billion? How could it create value if it did not integrate WhatsApp with Facebook?

In 2006, Sophia Amoruso started Nasty Gal, an eBay boutique selling vintage clothes. With a strong sense of style and personality, Amoruso poured herself into building the brand and developing relationships with her customers - typically the slightly edgy 18-24 year old. The company had grown since that time into a multi-category retailer, expanding into third party clothing, accessories and its own private label. Its explosive growth was one of the biggest stories in e-commerce, especially when the retailer attracted $50m in investment from Index Ventures, a top VC firm that funded other successful retailers such as Net-a-Porter and Etsy, in 2013. Yet, with a cash infusion, plans for a brick and mortar store, an ever-growing e-commerce site, and fierce competition, Amoruso wondered what opportunity to tackle next. Should she concentrate on product line expansion into lingerie, swimwear, cosmetics and fragrances? How would a brick and mortar store impact the focus of the company or its ability to develop customized web sites for overseas markets? How would she maintain the detail and attention she had put into so many aspects of the company as Nasty Gal grew? As Sophia's time was limited and management resources were already spread thin to sustain the existing site's growth, what was the best way forward?

In May 2012, Harvard University and the Massachusetts Institute of Technology (MIT) founded edX, a new non-profit joint venture that would provide a platform for massive open online courses (MOOCs). edX did not produce original courses or instructional content-it made a web platform through which Harvard and MIT, and subsequently dozens more "partner" universities, could offer their lecture courses as MOOCs. While the future role of MOOCs in higher education remained a topic of public debate, edX needed to answer concrete managerial and strategic questions. For example, what should edX's scope be? Should edX try to develop a consumer brand of its own, or rely on the brands of its partners? And how could edX monetize its services to recoup Harvard and MIT's investments and reward participating universities? This case presented the history of edX and the online education market as background for a discussion about edX's strategic choices.