Implement Retrenchment Strategy
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Imagine that you are a CEO for a large business. Your strategic planning team has just decided to pursue a retrenchment strategy. Describe some of the challenges your organization might face in implementing this strategy.
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Introduction
A retrenchment strategy is a corporate strategy with a goal of reducing cost and assets. This strategy also diversifies the organization's operations. The expenditure reductions and disinvestment is a swift means for turning around declining financial performance.
Challenges
? As mentioned above, a part of the retrenchment strategy is reducing the organization's expenditures. A common way to do this is through workforce reduction. Once the employees know that a retrenchment strategy is being used it can severely reduce morale and motivation because the strategy is often viewed as a threat to their job. This threat of employees loosing their jobs can cause anxiety about their future job prospects within the organization. This means that management must work very hard to maintain motivation and morale.
? Lack of diversity is also a challenge with retrenchment. Since this strategy reduces operations there will be fewer operations within the organization. Most likely before this strategy is implemented the organization would be engaged in multiple operations, and after retrenchment is implemented there will be a lack of diversity because the operations are reduced. Lack of ...
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