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It is a strategy which is used by organizations or corporations to reduce the overall size of operation or diversity of the company. The retrenchment strategy is a strategy that is adopted by an organization in order to achieve reduction in one or more business operations to cut expenses and acquire a more suitable financial position. In other words, a firm or organization follows certain strategy to eliminate its activities through reduction in its business operations. It involves backing up from markets or discontinuation in selling certain products or services so as to maintain a beneficial turnaround.Retrenchment Strategy Assignment Help provides a depth idea about retrenchment strategy and its different types.
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Different Types of Retrenchment Strategy and Its Pros and Cons
The process of retrenchment can be classified into three levels of strategy or three components explained in Retrenchment Strategy Assignment Help
• Turnaround Strategy- It is the first elementary step in terms of retrenchment. It means withdrawing, backing out or retreating from a wrongly taken decision to reverse the decline process. This looks into problem from both the company and its employee’s point of view. This process generally involves dissolving of redundant branches of the organization. This strategy checks the fiscal backdrops without harming the interest of the employees.
• Divestment Strategies: The employees have to vouch for higher level of treatment, when the business turnaround does not take place as expected. This next level of retrenchment is called divestment strategy. This policy focuses on reconstruction and rightsizing rather than just elimination. It is explained in Retrenchment Strategy Assignment Help.
• Liquidation -It is the worst side of retrenchment strategy. It does collateral damage to both parties. It means closing down of a company or the end of a firm. It comes to play when everything fails i.e., when damage has gone beyond repair and it is the last step of the whole process.
Certain pros and cons of retrenchment strategy explained in Retrenchment Strategy Assignment Help are
• Cost Effective Strategy- A retrenchment procedure is carried out when a company has lost a vast amount of money into something irrecoverable. But retrenchment is the best way to damages sustained. As a result, retrenchment strategy in business is positively cost effective without taking a larger toll on the company or organization. So, this is one of the best retrenchment benefits.
• Improves Performance: Once the retrenchment strategy has been placed, employees exhibit their best behavior. Any lack in performance can be harmful for them. This automatically calls upon their best performance.
• Loss of good Employees: Despite strict and fair screening, the company loses one or two of its best employees.
• Scathing: Due to strict screening, the company has to face a wave of criticism and hatred coming from employees who were unceremoniously.
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