In general, elimination of uncompetitive companies is one of the important tools that make the economy strong and prosperous.
If some system (company, branch, industry niche, product line - in different scales) in the economy is weak and inefficient, then simply allowing it to operate as-is will be a constant drain on the society, and artificially supporting/subsidizing it will hurt the people/companies who are either doing the same thing better, or doing some different, better thing.
On the other hand, ripping an inefficient company apart as the 'sharks' do - that is a way to reallocate all those resources (subsidiaries, employees, capital, buildings) to other places that will make a better use of them. The whole reason why large companies exist is because it's a way to get 2+2=5, so to speak. If some company achieves 2+2=3, then tearing it apart to get two 2's out of it is a valuable service for the financial ecosystem.
Lack of such 'sharks' increases short-term stability, but at the cost of having a lot of resources tied up in inefficient places; this is considered one of major factors why planned/command economies tend to fall behind to market economies - simply because they tend to leave uncompetitive businesses alone instead of agressively dismantling them.
And in this case, this whole fiasco might actually be partly to be blamed on lack of more sharks: it was not and is not possible to short stocks of Dick Smith.
I think the basic idea is that companies that are unprofitable or barely profitable or otherwise underperforming are chewed up and uhh... spat out, leaving the assets (people, inventory, etc) to be picked up by healthier companies.
Contrast this with 'zombie companies' in Japan, 'zombie banks' like Deutsche Bank, and so forth that are kept animated by gov/taxpayer money instead of fed to the sharks.
Dick Smith could have been wildly profitable and they still would've sold it.
It's all to do with focus and Woolworth's core business is not consumer electronics. It's supermarkets. And their core business is being decimated by their competitors (Coles/Aldi) and they are at real risk of not having a long term future if they don't focus.
I am in the supermarket business so I know exactly how serious their situation is.
If some system (company, branch, industry niche, product line - in different scales) in the economy is weak and inefficient, then simply allowing it to operate as-is will be a constant drain on the society, and artificially supporting/subsidizing it will hurt the people/companies who are either doing the same thing better, or doing some different, better thing.
On the other hand, ripping an inefficient company apart as the 'sharks' do - that is a way to reallocate all those resources (subsidiaries, employees, capital, buildings) to other places that will make a better use of them. The whole reason why large companies exist is because it's a way to get 2+2=5, so to speak. If some company achieves 2+2=3, then tearing it apart to get two 2's out of it is a valuable service for the financial ecosystem.
Lack of such 'sharks' increases short-term stability, but at the cost of having a lot of resources tied up in inefficient places; this is considered one of major factors why planned/command economies tend to fall behind to market economies - simply because they tend to leave uncompetitive businesses alone instead of agressively dismantling them.