Continuing operations are ongoing business activities that generate revenue, while discontinued operations are those that will not continue into the future. Companies must assess market potential and adapt to new technologies to remain viable. Ignoring continuing operations can lead to failure.
Continuing operations are the business operations that a company intends to undertake both for the present and for the coming years. This is in contrast to the concept of discontinued operations, which are any type of business supported by the company in the past, but which will not continue into the future. Continued operations still have the potential to generate revenue and capture consumer attention.
There are many companies that include both suspended and continued operations in their history. An example would be established work machine manufacturers of the early 20th century. In earlier years, many of these companies offered lines of manual and electronic typewriters as well as simple mimeograph machines. Over time, some of these selections have been phased out as newer technology has made older equipment obsolete. Instead of making typewriters and mimeograph machines, these same companies began making high-quality desktop computers, laptops, and copiers. Since computers and copiers are expected to be with us for the foreseeable future, they can be said to be examples of ongoing operations or products that such companies will continue to manufacture and sell.
The key to evaluating ongoing operations is correctly assessing the ongoing market potential for a particular product. If it is determined that a market still exists for a particular product, even if that market is shrinking, the company may choose to continue manufacturing and selling the goods until a reasonable amount of profit is generated. At the same time, the company is likely to initiate a new product line that addresses an emerging need within the market, often related to a newer technology. This approach allows the company to continue serving the needs of long-standing customers, with both older products and newer products that are rapidly gaining attention.
The basic structure of continuing operations requires a company to occasionally change focus in order to remain a viable business entity. Companies that choose to ignore the principle of continuing operations and remain focused on products that are no longer desirable or obsolete often don’t last long as the market for their products continues to shrink to nothing.
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