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STRATEGIC MANAGEMENT

AND BUSINESS POLICY


THIRD EDITION
Chapter 7
Corporate-level strategies:
Stability, retrenchment,
and restructuring
AZHAR KAZMI
(c) Dr. Azhar Kazmi 2008 2
Learning objectives
Describe the three types of stability strategies and
discuss the conditions under which each of them is
used
Describe the three types of retrenchment strategies
and discuss the conditions under which each of them
is used
Discuss the evolution of a complex network of
combination strategies to deal with the changing
environment
Discuss the rationale of restructuring strategies
Examine the restructuring strategies in the Indian
context
(c) Dr. Azhar Kazmi 2008 3
Stability strategies
Stability strategies result from
attempts by an organisation at
incremental improvement of
functional performance.
No-change strategy
Profit strategy
Pause / proceed-with-caution
strategy
(c) Dr. Azhar Kazmi 2008 4
Retrenchment strategies
Retrenchment strategy is followed
when an organisation substantially
reduces the scope of its activities
Turnaround strategies
Divestment strategies
Liquidation strategies
(c) Dr. Azhar Kazmi 2008 5
Turnaround strategies
Turnaround strategies derive their
name from the action involved, i.e.
reversing a negative trend and
turning around the organisation to
profitability.
Conditions for turnaround
Managing turnaround
Approaches to turnaround
Action plan for turnaround
Role of external agencies in turnaround
(c) Dr. Azhar Kazmi 2008 6
Divestment strategies
Divestment strategy involves the sale
or liquidation of a portion of business,
or a major division, profit centre or
SBU.
Reasons for divestment
Approaches to divestment
Decision to divest
(c) Dr. Azhar Kazmi 2008 7
Liquidation strategies
Liquidation involves closing down an
organisation and selling its assets.
Why is liquidation difficult or undesirable?
Planned liquidation
Legal aspects of liquidation
Liquidation strategies in Indian context
(c) Dr. Azhar Kazmi 2008 8
Combination strategies
Combination strategies are a mixture
of stability, expansion or
retrenchment strategies applied
either simultaneously (at the same
time in different businesses) or
sequentially (at different times in the
same business).
Sequential combination
Simultaneous combination
(c) Dr. Azhar Kazmi 2008 9
Corporate restructuring
Corporate- or business-level
restructuring means changes in the
composition of an organisation's set
of businesses in order to create a
more profitable enterprise.
Rationale for restructuring
Restructuring in the Indian context