Question

b. In corporate retrenchment strategy, a turnaround, captivity, sell out and liquidation are   undertaking in that order. Liquidating a business is embroiled with bankruptcy. What then is the difference and whose duty is to undertake oeach of these activity.?

Answer 1

Answer

A retrenchment strategy is followed when an organization substantially reduces the scope of activity. This is done through an attempt to find out the problem areas and diagnose the cause of the problems. Next, steps are taken to solve the problems.

If the organization chooses to focus on ways and means to reverse the process of decline, it adopts at turnaround strategy.

If it cutts off the loss making units, division or curtails its product line or reduces the functions performed, it adopts a divestment strategy.

If none of these actions work, then it may choose to abandon the activities totally, resulting in an liquidation strategy. A retrenchment strategy considered the most extreme and unattractive is liquidation strategy, which involves closing down a firm and selling its assets. Liquidation strategy may be unpleasant as a strategic alternative, but when a dead business is worth more than alive, it is a good proposition.

These all are corporate level strategies. Corporate level strategies the highest level of strategic decision making and cover action dealing with the objective of the firm, acquisition and allocation of resources and coordination of strategies of various sbu for optimal performance. Top management of the organization makes strategic decisions. The nature of strategic decision tends to be value-oriented, conceptual and less concrete than decisions at the business or functional level.