A retrenchment strategy which is considered the most extreme and unattractive is the liquidation strategy, which involves closing down a firm and selling its assets. It is considered as the last resort because it leads to serious consequences such as loss of employment for workers and other employees, termination of opportunities where a firm could pursue any future activities and the stigma of failure.
2. Prepared By
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Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com
4. Retrenchment strategy
• 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.
5. Examples of Retrenchment strategy
• General Motors of the
United States stopped
producing a number of
"makes" of automobile. GM
decided that it needed to
retrench by concentrating
on just a few "makes." It
hoped this would help it
return to profitability.
6. Liquidation Strategy
• A retrenchment strategy
which is considered the most
extreme and unattractive is
the liquidation strategy,
which involves closing down
a firm and selling its assets. It
is considered as the last
resort because it leads to
serious consequences such
as loss of employment for
workers and other
employees, termination of
opportunities where a firm
could pursue any future
activities and the stigma of
failure.
7. Examples of Liquidation Strategy
• JC Penney recently sold its
Eckerd chain of drugstores to
focus on the corporation’s core
business of department stores
and Internet and catalog sales.
Studies show that between 33
per cent and 50 per cent of all
acquisitions are later divested.
