Defensive strategies in strategic management business. A retrenchment business reverses that, withdrawing from certain markets or discontinuing product lines to slash expenses. The limitation of discussion now is discussed only on strategic formulation. Meaning and concept of turnaround strategy in hindi 2. When an enterprise is satisfied by its present position, it will not like to change. The various factors that influence the turnaround strategies are the management, human resources, production. A strategy or general plan of action might be formulated for broad, longterm, corporate goals and objectives, for more specific business unit goals and objec.
A strategy used by corporations to reduce the diversity or the overall size of the operations of the company. Retrenchment strategy alternatives include shrinking selectively, extracting cash for investment in other businesses, and divestment. Turnaround strategies turnaround strategy means backing out, withdrawing or retreating from a decision wrongly taken earlier in order to reverse the process of decline. 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 the corporate sector, its emergence started after. Its characteristics, formulation, types and other details. This article analyzes retrenchment strategies that family businesses adopt during periods of crisis. 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. When retrenchment is applied by the organization but it does not succeed in accomplishing the desired results. The research further produced an empirical discrimination between retrenchment as a stand. Effects of retrenchment on organizational performance at. The various factors that influence the turnaround strategies are the management, human resources. Evaluation of strategy is that phase of strategic management process in which managers try to assure that the strategic choice is properly implemented and is meeting the objectives of the enterprise. There are certain guidelines that reflect the effectiveness of the divestiture strategy which are as follow.
Retrenchment strategies market economics business scribd. Strategic management courses is considered one of the most important courses that you will take during mba postgraduate degree as it integrates other courses, builds on them, and acts as a steppingstone to the real world of business the purpose of this course is to enhance your capacity to do the job of a general manager responsible for strategic performance. Types of corporate level strategy 4 most important types. Ltasks of strategic management lstrategic management is an ongoing process lwho performs the tasks of strategy lbenefits of managing strategically adapting to change lorganizations should continually monitor internal and external events and trends so that timely changes. Retrenchment strategy retrenchment involve total or partial withdrawal from a customer group, customer function or use of an alternative technology. The strategy of retrenchment and its consequences by colin dueck colin dueck is a senior fellow of the fpri and an associate professor in the school of policy, government, and international affairs at george mason university.
Strategic management is an ongoing process to develop and revise futureoriented strategies that. While these strategies result in generating cash, they differ in terms of their intentions. Corporations often improve their market position by expanding, diversifying or buying up other firms. Strategic management is the art, science and craft of formulating, implementing and evaluating crossfunctional decisions that will enable an organization to achieve its objectives. Pdf strategic operations management radhitya wirawan. The retrenchment strategy is adopted when an organization aims at reducing its one or more business. Cascio 2005 examined the relationships between changes. Pdf does retrenchment strategy induce family firms value. Retrenching strategy is also known as downsizing and cutback.
The three primary types of retrenchment strategy are. A strategy or general plan of action might be formulated for broad, longterm, corporate goals and objectives, for. Strategic management articles management study guide. These are the turnaround strategy, divestment strategy and last but not the least, liquidation. Strategic management is a broader term than strategy and is a process that includes top managements analysis of the environment in which the organization operates prior to formulat ing a strategy, as well as the plan for implementation and control of the strategy.
Dec 24, 2018 the broad corporate strategy alternatives, sometimes referred to as grand strategies, are. In strategic management of nokia the concept of strategic management is refers to 1 strategy formulation, 2 strategy implementation and 3 strategy evaluation. Retrenchment strategies corporate level strategies strategic mana. If you continue browsing the site, you agree to the use of cookies on this website. Types and classification of retrenchment strategies types of retrenchment strategy 8 types. Retrenchment strategy is a strategy that is geared towards reducing expenditures. Retrenchment strategy strategic management mergers and. These appear to be the most common approaches adopted by businesses to deal with recession conditions, especially in the short. Ex a pharmaceutical firm pulls out from retail selling to concentrate on institutional selling in order to reduce the size of its sales force and increaser marketing efficiency. It involves creating organizations which generate value even in turbulent environment over a sustained period of time. Based on a select overview of papers published in the journals of the strategic management society, we advance four types of strategic responses to crisis. Therefore, given to these questions, the importance of strategic management should be further investigated.
Does retrenchment strategy mitigate earnings management. In the corporate sector, its emergence started after the culmination of second world war. Turnaround strategy means backing out, withdrawing or retreating from a decision wrongly taken earlier in order to reverse the process of decline. Strategies used to make decisions regarding the allocation of resources or pursuing an operational strategy are often categorized as stability strategies, expansion growth strategies, retrenchment strategies, or combination strategies. This strategy is often used in order to cut expenses with the goal of becoming a more financial stable business. Ex a pharmaceutical firm pulls out from retail selling to concentrate on institutional selling in order to reduce the size of. Retrenchment is a corporatelevel strategy that seeks to reduce the size or diversity of an organizations operations. What are the different types of retrenchment strategies of. Describe the strategic planning process and swot analysis. Understand grand strategies for domestic and international operations define corporatelevel strategies and explain the. In an increasingly global economic system, where competitors, customers and. The process of retrenchment strategies in strategic management can be broken into 3 levels of strategy or 3 divisible components. At times, it also becomes a means to ensure an organizations financial stability.
Retrenchment strategy is a corporate level strategy that aims to reduce the size or diversity of organizational operations. A redemption strategy seeks to restructure, sell or otherwise divest a business unit. When the requirement of resources exceeds its available capacity. This strategy is often used in order to cut expenses with the goal of becoming a more. Growth strategy, stability strategy, retrenchment strategy and combination strategy corporate strategy is about strategic decisions about determining overall scope and direction of a corporation and the way in which its various business units work together to attain particular goals. Reasons for this strategy are poor performance, suffering from losses, inefficient management competecies. This article discusses some of the common pitfalls of strategic management and suggests some approaches to actualize strategies that make the firms market leaders. Retrenchment retrenchment revolves around cutting sales. Turnaround strategy is a form of retrenchment strategy which focuses on operational improvement when the state of decline is not severe. Jun 2009 introduction it is useful to consider strategy formulation as part of a strategic management process that comprises three phases. 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.
Different types of retrenchment strategies of business are given below. Dictionary term of the day articles subjects businessdictionary business dictionary dictionary toggle. Article information, pdf download for retrenchment strategies and family. A retrenchment grand strategy is followed when an organization aims at a contraction of its activities through substantial reduction or the elimination of the scope of one or more of its businesses in terms of their respective customer groups, customer functions, or alternative technologies either singly or jointly in order to improve its overall performance. Retrenchment strategy and its challenges brainmass. Strategies in management 4 types your article library. The liquidation strategy is the most unpleasant strategy adopted by the organization that includes selling off its assets and the final closure or winding up of the business operations.
Retrenchment is popular and frequency strategies used in. The strategic development process is defined here to embrace the management processes that inform, shape and support the strategic decisions confronting an organisation. Jun 16, 2010 retrenchment strategies followed by organizations a retrenchment grand strategy is followed when an organization aims at a contraction of its activities through substantial reduction or the elimination of the scope of one or more of its businesses in terms of their respective customer groups, customer functions, or alternative technologies. Pdf this paper investigated the performance of retrenchment strategy of. Manu melwin joy assistant professor ilahia school of management studies kerala, india. Strategic management notes pdf, book, paper mba 2020. During the organizational life cycle, managements choose between growth, stability, or retrenchment strategies to overcome deteriorating trends in performance. Awareness of these responses has implications for managers and strategy scholars alike. Strategic planning if done poorly results in more harm than good and this is the reason why the pitfalls of strategic planning and strategic management must be avoided. Nokias vision of the future, mission, goals, and strategies. It is the most crucial and the last resort to retrenchment since it involves serious consequences such as a sense of failure, loss of future. To manage for the present and continue to change so that the firm continues to prosper, in a. Companies that use a retrenchment strategy are shrinking to survive. Despite many countries and organizations adopting retrenchment as a management strategy, a bulk of retrenchment related literature is based on the results of studies conducted in the united states.
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