Corporate strategists attempt to devise an overall plan for greater corporate success. Strategists evaluate all factors affecting the corporation's performance, from internal components like employees and chain of command to external forces such as competition and customers. While corporate strategists prefer finding ways to expand business, they often face tough economic times and need a more conservative approach. Retrenchment strategy provides corporations a chance to regroup, preserving resources for the greater good.

Function During corporate retrenchment, the corporation reduces the scope of its

activities. Such a reduction usually means selling assets, discontinuing

unsuccessful product lines, dismissing employees, restructuring debt or even

liquidating the firm. This strategy is often called downsizing or rightsizing.

Ideally, retrenchment is only a temporary measure designed to save money

and allow the firm to pursue corporate advancement once the financial

situation improves.

Divestmento A serious form of retrenchment, divestment involves a firm selling one or

more of the businesses from its corporate portfolio. The firm takes the

resulting money and reinvests it into one of its more promising businesses,

with the influx of cash hopefully securing a better future for not only the

individual business but the overall corporation as well. Essentially,

divestment cuts away the dead wood so the rest of the corporate tree can

grow.

Bankruptcyo Bankruptcy may also serve as a form of corporate retrenchment. During

bankruptcy, a corporation receives protection from creditors, allowing the

firm to restructure its debt obligations to increase cash flow. Bankruptcy

buys the corporation time, providing a chance to engineer a new strategy to

reclaim financial success. Corporations only consider bankruptcy once

divesting and other forms of retrenchment fail.

Liquidation

o No corporation wants to face liquidation. The most drastic form of corporate

retrenchment, liquidation involves selling or closing the entire corporation to

recover whatever funds remain. The firm ceases to exist, with all employees

fired and all products and services discontinued. Corporate strategists see

liquidation as a last resort and will do whatever possible to try and avoid

taking that final step.