This Presentation related to Retrenchment, Diversification & Mix strategy.

1. Retrenchment, Diversification
&
Mixed Strategy
Presented By:-
Manish Pandey (15BMI007)
Rohit Narula (15BMI021)

2. RETRENCHMENT STRATEGY
 It is followed by when an organization substantially reduces the
scope of its activities.
 This strategy is often used in order to cut expenses with the goal of
becoming a more financial stable business.
 Typically the strategy involves withdrawing from certain markets or
the discontinuation of selling certain products or service in order to
make a beneficial turnaround.

3. TYPES OF RETRENCHMENT
STRATEGY
Turnaround Strategies
Eliminating unprofitable outputs, pruning/cutting assets, reducing size of
work force, rethinking firm’s products lines and customer groups.
Divestment Strategies
sell one of business units
Liquidation Strategies
last resort strategy

4. DIVERSIFICATION STRATEGIES
 Diversification strategy to enter into a new market or industry in
which the business doesn't currently operate, while also creating a
new product for that new market.

5. TYPES OF DIVERSIFICATION STRATEGY
• Concentric diversification
• Conglomerate diversification
• Horizontal diversification

6. Defined
• Adding new, but
related, products or
services
Example
• National Westminister
Bank PLC in Britain
bought the leading
British insurance
company, Legal &
General Group PLC.
Concentric Diversification

7. Guidelines for Concentric Diversification
 Competes in no- or slow-growth industry
 Adding new & related products increases sales of current
products
 New & related products offered at competitive prices
 Current products are in decline stage of the product life cycle
 Strong management team

8. Defined
• Adding new, unrelated
products or services
Example
• Consultant Construction
Engineering acquired Bisects
factory.
Conglomerate Diversification

9. Guidelines for Conglomerate Diversification
 Declining annual sales and profits
 Capital and managerial talent to compete successfully in a new
industry
 Financial synergy between the acquired and acquiring firms
 Exiting markets for present products are saturated

10. Horizontal Diversification
Defined
• Adding new,
unrelated products
or services for
present customers
Example
• The El-Awda Co.
provide ice-cream
product to present
customer

11. Guidelines for Horizontal Diversification
 Revenues from current products/services would increase
significantly by adding the new unrelated products
 Highly competitive and/or no-growth industry w/low
margins and returns
 Present distribution channels can be used to market new
products to current customers
 New products have counter cyclical sales patterns
compared to existing products

12. MIXED STRATEGY
 Mixed strategy is not an independent classification but it is a combination
of different strategies – stability, growth, retrenchment – in various
forms.
 It also know as Combination or Hybrid Strategy.
 Thus the possible combinations of strategies may be:-
I. Stability in some businesses and growth in other businesses.
II. Stability in some businesses and retrenchment in other businesses.
III. Growth in some businesses and retrenchment in other businesses.
IV. Stability, growth and retrenchment in different businesses.

13. THANK YOU