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What are the types of Retrenchment?

Discuss the types of Retrenchment.

Answers

Maurice
(i) Divestment strategy involves selling the business or setting it up as a separate corporation. Divestment is used when a particular business doesn’t fit well in the organization or consistently fails to reach the objectives set for it. Divestment can also be used to improve the financial position of the divesting organization.

(ii) Liquidation strategy involves closure of the business, which is no longer profitable. It may be technologically obsolete or out of times with market trends.

(iii) Turnaround strategy is used when an organization is performing poorly but has not yet reached a critical stage. It usually involves getting rid of unprofitable products, pruning the work force, trimming distribution outlets, and seeking other methods of making the organization more efficient. If the turnaround is successful, the organization may then focus on growth strategies.
maurice.mutuku answered the question on April 16, 2019 at 13:46

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