This document discusses retrenchment strategy and provides examples of different types of retrenchment strategies including turnaround, divestment, and liquidation. Retrenchment strategy aims to reduce the size and diversity of organizational operations and ensure financial stability through reducing expenditures. It involves reducing activities through a considerable reduction in business operations in areas like customer groups, functions, and technologies. Turnaround strategy means reversing a wrong decision to reverse decline. Divestment involves selling part of the business. Liquidation means closing down the entire firm and selling its assets, which is a last resort that can lead to job losses and stigma.

1. RETRENCHMENT
STRATEGY
-Diksha
-Deepika
-Arpita Singh
-Divija Bhardwraj
-Robin Singh
-Darshit Srivstava
RETRENCHMENT
STRATEGY
Presented by:-
- Arpita Singh

2. What is retrenchment?
“To cut down or reduce
something”
“Tighten one’s belt”
“Use resources more carefully”

3. Retrenchment strategy
◦ Retrenchment strategy is a corporate level strategy that aims to reduce the size
or diversity of organizational operations. At times, it also becomes a means to
ensure an organization’s financial stability. This is done by reducing the
expenditure. A retrenchment strategy is a design to fortify an organization’s
basic distinctive competence.
◦ In other words, the strategy followed, when a firm decides to eliminate its
activities through a considerable reduction in its business operations, in the
perspective of customer groups, customer functions and technology
alternatives, either individually or collectively is called as Retrenchment
strategy.

4. Example:-

5. Types of Retrenchment strategies

6. Turnaround
◦ 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.
These danger signs are as follows:
1) Persistent negative cash flow
2) Continuous losses
3) Declining market share
4) Deterioration in physical facilities
5) Over-manpower, high turnover of employees, and low morale

7. Example:-

8. Divestment
◦ Divestment strategy involves the sale or liquidation of a portion of business, or a major division, profit
centre or SBU. Divestment is usually a restructuring plan and is adopted when a turnaround has been
attempted but has proved to be unsuccessful or it was ignored.
A divestment strategy may be adopted due to the following reasons:
1) A business can not be integrated within the company.
2) Persistent negative cash flows from a particular business create financial problems for the whole company.
3) Firm is unable to face competition.
4) Technological up gradation is required if the business is to survive which company can not afford.

9. Example:-

10. Liquidation
◦ Liquidation strategy means closing down the entire firm and selling its assets. It is considered the most
extreme and the last resort because it leads to serious consequences such as loss of employment for
employees, termination of opportunities where a firm could pursue any future activities, and the stigma of
failure.
◦ Reasons for liquidation include:
1) Business becoming unprofitable.
2) Obsolescence of product/process
3) High competition
4) Industry overcapacity
5) Failure of strategy

11. Example:-