In this module, bacha log, we are going to see retrenchment strategy and turnaround
strategy. Retrenchment, grand strategy is followed when an organisation substantially
reduces the scope of its activity. This is done through an attempt to find out the problem
areas and diagnose the causes of the problem. Next, steps are taken to solve these
problems, right, and these steps result in different kinds of retrenchment, that is pull it back
or taking a step back. If the organisation chooses to focus on ways and means to reverse the
process of decline, it adopts a turnaround strategy, right. If company feels like we will be
successful, right, in coming up with profits and then they can even adopt a turnaround
strategy. If it cuts off the loss making units, divisions or SBUs, curtails its product line or
reduces the function performed, it adopts a divestment, right, that is selling it off, that is
called divestiture also. If none of these actions work, then it may choose to abandon the
activities totally, resulting in liquidation, sold off, right, a close down.
Symptoms, a persistent negative cash flow reason, right, and we can make out negative
profits, declining market share, deterioration in physical facilities, overmanning, right, more
number of people may be employed somewhere, right, during down the line. Then over the
years’ requirement reduced, so high turnover of employees may be possible, that is rate of
attrition and low morale of the employees, uncompetitive products or services. These are
the symptoms, mismanagement again, right, possibility.
Elements contributing to turnaround, when can you go for changes in top management