myz-vgb.ru A Business Encyclopedia

Retrenchment Strategy

Definition: The Retrenchment Strategy is adopted when an organization aims at reducing its one or more business operations with the view to cut expenses and reach to a more stable financial position.

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.

The firm can either restructure its business operations or discontinue it, so as to revitalize its financial position. There are three types of Retrenchment Strategies:

Retrenchment Strategy

  1. Turnaround
  2. Divestment
  3. Liquidation

To further comprehend the meaning of Retrenchment Strategy, go through the following examples in terms of customer groups, customer functions and technology alternatives.

  1. The book publication house may pull out of the customer sales through market intermediaries and may focus on the direct institutional sales. This may be done to slash the sales force and increase the marketing efficiency.
  2. The hotel may focus on the room facilities which is more profitable and may shut down the less profitable services given in the banquet halls during occasions.
  3. The institute may offer a distance learning programme for a particular subject, despite teaching the students in the classrooms. This may be done to cut the expenses or to use the facility more efficiently, for some other purpose.

In all the above examples, the firms have made the significant changes either in their customer groups, functions and technology/process, with the intention to cut the expenses and maintain their financial stability.

7 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Shares

Related pages


whistling blowingdefinition of promotional pricingmanagerial grid meaningdemand schedule in economicstypes of demat accountbackward integration examplesjob evaluation methods exampleswhat are the characteristics of monopolistic competition and oligopolydefine turnover ratiowhat is the definition of hire purchasedefine queuing systemego meaning in psychologymoratorium meaningfour steps of entrepreneurial processmeaning of scorecardwhat are cardinal traitsneft sunday timingssales forecast equationiso quantdevelopment definition in hrmmanagerial grid definitionoutsource meanemployment provident fund balance statusdefinition of dictatorial leadershipgraph of law of diminishing marginal utilitymeaning of liabilities in teluguchronically meaningdifference between an operating lease and a finance leasedonkey with carrot on a sticksensibility analysisfixed asset turnover ratio industry averageethical theories in business ethicsgeocentric attitudemoratorium meaning in telugunonverbal meaningemployee referral meaningtypes of oligopoly marketdefinition proprietorshipdefinition of market demand curveclassical management theory fayolneft stands forkiosk banking sbiwhat is autocratic decision makingspearman's rank coefficienttheories of organisational structurequota sampling in statisticswhat is the meaning of monopoly in economicspiecework pay systemsnowballing techniquemonopolistic compeitionguerilla attackgraduate aptitude test in engineeringclassicism theorywhat is ansoffs matrixjohari window theoryfixed asset turnover interpretationcobb douglas functioninformal networks definitionsender receiver definitionwho is david mcclellanddefine treasury billstotal utility marginal utilitywhat are the determinants of price elasticityoperant conditioning definedwhat is the definition of flankcost oriented pricing methodsmeaning of diversifyingdefine cyclically unemployedfirms in monopolistic competitionlaissez-faire leadership style definitionretrenched meaningprinciples of mgmtgnp measuresqouta sampling