Retrenchment strategies:
Retrenchment grand strategy is followed when an organization substantially reduces the scope of either its customer groups, customer functions, or alternative technologies – singly or jointly – in order to improve its performance.
Retrenchment involves total or partial withdrawal from either a customer group, customer function, or use of an alternative technology as can be seen from the situation given below.
- A pharmaceutical firm pulls out from retail selling to concentrate on institutional selling in order to reduce its sales force and increase marketing efficiency.
- A corporate hospital decides to focus only on specially treatment and realize higher revenues by reducing its commitment to general cases which are typically less profitable to deal with
- A training institution attempts to serve a large clientele through the distance learning system and discard its fact-to-face interaction methodology of training in order its expenses and use the existing facilities and personnel more efficiently.
In this manner, retrenchment attempts to “trim the fat” and results in a ‘slimmer’ organization bereft of unprofitable customer groups, customer functions, or alternative technologies.
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