Divestment strategy - Retrenchment Strategies

Corporate Level Strategies

Prepared By

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Manu Melwin JoyAssistant Professor

Ilahia School of Management Studies

Kerala, India.Phone – 9744551114

Mail – manu_melwinjoy@yahoo.com

Retrenchment Strategies

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.

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.

Divestment strategy

• A divestment strategy

involves the sale or

liquidation of a portion of

business, or a major

division.

Divestment strategy

• TATA group is a highly diversified entity

with a range of businesses under its

fold. They identified their non – core

businesses for divestment. TOMCO was

divested and sold to Hindustan Levers as

soaps and a detergent was not

considered a core business for the Tatas.