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STABILITY & RETRENCHMENT
MANAGEMENT
Mithibai College SYBMS(B) 2013
Introduction
• A part of Corporate Strategy
• Corporate Strategies are framed and
controlled by the top level management
• Both these strategies deal with how a
firm would like to behave in the future
Stability
• Stability strategy implies continuing the
current activities of the firm without any
significant change in direction
• This strategy is most likely to be
pursued by small businesses or firms in
a mature stage of development
• Stability strategy is not a ‘do nothing’
approach nor goals such as profit
growth are abandoned
Types Of Stability StrategiesTypes
No-Change
Profit
Pause/Proceed
With Caution
No-Change Strategy
• A no change strategy is a decision to do
nothing new
• A firm adopts this strategy when their
internal & external environment is
stable.
• Small and Medium firms adopt this sort
of strategy
Steel Authority Of India Ltd.
Profit Strategy
• The profit strategy is an attempt to
artificially maintain profits by reducing
investments and short-term
expenditures
• The profit strategy is useful to get over a
temporary difficulty
• But if continued for long, it will lead to a
serious deterioration in the company’s
position
Larsen & Toubro
Pause/Proceed with Caution
• Employed by firms to test the grounds
before the full-fledged strategy
• Helps all the employees to get used to it
• This strategy enables a company to
consolidate its resources after
prolonged rapid growth
HUL & Shoes
Retrenchment
• A strategy used by corporations to
reduce the diversity or the overall size
of the operations of the company
• It is often used in order to cut expenses
• Goal of implementing this is to become
a more financial stable business
Types Of Retrenchment
Strategies
Types
Turnaround
Disinvestment
Liquidation
Turnaround Strategies
• Turnaround strategy means backing
out, withdrawing or retreating from a
decision wrongly taken earlier in order
to reverse the process of decline.
• There are certain conditions or
indicators which point out that a
turnaround is needed if the organization
has to survive.
Havells
Divestment Strategies
• Divestment strategy involves the sale or
liquidation of a portion of business, or a
major division, Profit Centre or SBU
• It is adopted when a turnaround has
been attempted but was unsuccessful
• Certain reasons are drawn for this
strategy to be adopted
Nokia-Microsoft
Liquidation Strategy
• Liquidation strategy means closing
down the entire firm and selling its
assets
• Most extreme and the last resort
• “Dead business is worth more than
alive", it is a good proposition
• There are various reasons due to which
a firm would consider liquidation
Conclusion
Stability & retrenchment  management BMS

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Stability & retrenchment management BMS

  • 2. Introduction • A part of Corporate Strategy • Corporate Strategies are framed and controlled by the top level management • Both these strategies deal with how a firm would like to behave in the future
  • 3. Stability • Stability strategy implies continuing the current activities of the firm without any significant change in direction • This strategy is most likely to be pursued by small businesses or firms in a mature stage of development • Stability strategy is not a ‘do nothing’ approach nor goals such as profit growth are abandoned
  • 4. Types Of Stability StrategiesTypes No-Change Profit Pause/Proceed With Caution
  • 5. No-Change Strategy • A no change strategy is a decision to do nothing new • A firm adopts this strategy when their internal & external environment is stable. • Small and Medium firms adopt this sort of strategy
  • 6. Steel Authority Of India Ltd.
  • 7. Profit Strategy • The profit strategy is an attempt to artificially maintain profits by reducing investments and short-term expenditures • The profit strategy is useful to get over a temporary difficulty • But if continued for long, it will lead to a serious deterioration in the company’s position
  • 9. Pause/Proceed with Caution • Employed by firms to test the grounds before the full-fledged strategy • Helps all the employees to get used to it • This strategy enables a company to consolidate its resources after prolonged rapid growth
  • 11. Retrenchment • A strategy used by corporations to reduce the diversity or the overall size of the operations of the company • It is often used in order to cut expenses • Goal of implementing this is to become a more financial stable business
  • 13. Turnaround Strategies • Turnaround strategy means backing out, withdrawing or retreating from a decision wrongly taken earlier in order to reverse the process of decline. • There are certain conditions or indicators which point out that a turnaround is needed if the organization has to survive.
  • 15. Divestment Strategies • Divestment strategy involves the sale or liquidation of a portion of business, or a major division, Profit Centre or SBU • It is adopted when a turnaround has been attempted but was unsuccessful • Certain reasons are drawn for this strategy to be adopted
  • 17. Liquidation Strategy • Liquidation strategy means closing down the entire firm and selling its assets • Most extreme and the last resort • “Dead business is worth more than alive", it is a good proposition • There are various reasons due to which a firm would consider liquidation
  • 18.