Final Presentation s.m by Talha (1)

8/2/2019 Final Presentation s.m by Talha (1)

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What is Retrenchment?

To cut down or Reduce Something

Tighten Ones Belt

Use R

esources More Carefully

Retrenchment is a corporate-level strategy that seeks to

reduce the size or diversity of an organization's operations.

Retrenchment is also a reduction of expenditures in orderto become financially stable.


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What Drives Retrenchment?

Uncompetitive Cost Structure

Inadequate Return on Investment

Poor Competitive Position Financial Distress (e.g. High Debt)

Market Decline

Failed Takeover

Economic Downturn

Change of Ownership

All of which

indicatethe need for

Strategic

Change


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Significant reduction in output and capacity.

Significant job loses.

Product and market withdrawals.

Disposals of business unit.

De-mergers - A business strategy in which a single business

is broken into components, either to operate on theirown, or to be dissolved.

Methods of Retrenchment


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Starbucks Exits Australia

Coffee chain Starbucks says it plans to shut 61 of its 85 stores in

Australia.

Starbucks rationalizes its store portfolio in Australia 2008.

Poor competitive position there, Hard to compete with

existing coffee. shops operators.

Strategic decision to focus investment on the US market


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Boston Consulting Group Matrix

BCG Matrix is developed by a group known as Boston

Consulting Group. It seeks to place the different

products of an organization in different grids such as to

analyze them in a comparative manner in terms of

profitability or in terms of

a) Percentage growth in sale and

b) Market share position to be exact. Thus

It gives an opportunity of self assessment to theorganization to reassess its product positioning and

come out with alternative solution if the original

placement of the products in the market does not meet

the desired level of growth.


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Nesvita

Nestle Maggi pickles

Nescafe

Maggi noddle's

Nestle pure life

Ceralec Milky bar

Nestle dahi

Relative market share position in the industry

In

ygowhrae

H

M

L

Divestiture

Retrenchment

M L

BCG MATRIX - NESTLE

Stars Questionmarks

Cash cows Dogs


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Product: Maggi Pickles

Position: Question Mark

Intended placement: (Disinvest)

Reasons for present position:

Maggi pickles and, on account of its limited variety (especially

in this taste crazy country) and comparatively higher prices,

has been unable to acquire a market necessary for its bare

minimum existence.

The sales of Maggi pickles has never really trigged since its

launch.


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Product: Milky Bar

Position: Dogs

Intended placement: (Disinvest)

Reason for present position:

Milky Bar has been placed as a Dog on account of the

inherent lack of core quality which makes it generic with

chocolates. This was the main reason why it was never

considered a competitor by other chocolate manufactures

and the consumers also treated it so.


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Internal-External (IE) Matrix

The Internal-External (IE) matrix is another strategic

management tool used to analyze working conditions and

strategic position of a business. The Internal External Matrixor

IE matrix is based on an analysis of internal and external

business factors which are combined into one suggestive model.

How does the Internal-External IE matrix work?

The IE matrix is based on the following two criteria:

Score from the EFE matrix -- this score is plotted on the y-axis

Score from the IFE matrix -- plotted on the x-axis


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How do I create the EFE matrix?

List factors:The first step is to gather a list of external factors.

Divide factors into two groups: opportunities and threats.

Assign weights: Assign a weight to each factor. The value of

each weight should be between 0 and 1 (or alternatively

between 10 and 100 if you use the 10 to 100 scale). Zero

means the factor is not important. One or hundred means that

the factor is the most influential and critical one. The total

value of all weights together should equal 1 or 100.


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Rate factors:Assign a rating to each factor. Rating should bebetween 1 and 4. Rating indicates how effective the firmscurrent strategies respond to the factor. 1 = the response ispoor. 2 = the response is below average. 3 = above average. 4 =superior. Weights are industry-specific. Ratings are company-specific.

Multiply weights by ratings: Multiply each factor weight withits rating. This will calculate the weighted score for each factor.

Total all weighted scores:Add all weighted scores for each

factor. This will calculate the total weighted score for thecompany.


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List factors: Conduct internal audit and identify both strengths

and weaknesses in all your business areas.

Weights: Having identified strengths and weaknesses, the coreof the IFE matrix, assign a weight that ranges from 0.00 to 1.00to each factor. After you assign weight to individual factors,

make sure the sum of all weights equals 1.00 (or 100 if usingthe 0 to 100 scale weights).

Rating: Assign a 1 to X rating to each factor. Your rating scalecan be per your preference. Practitioners usually use rating on

the scale from 1 to 4. Rating captures whether the factorrepresents a major weakness (rating = 1), a minor weakness(rating = 2), a minor strength (rating = 3), or a major strength(rating = 4). If you use the rating scale 1 to 4, then strengthsmust receive a 4 or 3 rating and weaknesses must receive a 1or 2 rating.

How do I create the IFE matrix?


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Multiply: Now we can get to the IFE matrix math. Multiply

each factor's weight by its rating. This will give you a

weighted score for each factor.

Sum: The last step in constructing the IFE matrix is to sumthe weighted scores for each factor. This provides the total

weighted score for your business.


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Yahoo! Inc. (NASDAQ: YHOO) is an American multinationalinternet corporation headquartered in California, United States.The company is perhaps best known for its web portal, searchengine (Yahoo! Search), Yahoo! Directory, Yahoo! Mail, Yahoo!

News, Yahoo! Answers, advertising, online mapping, fantasysports and social media services.


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Yahoo! Posted a 78% first quarter 2009 profit decline and reacted byeliminating 675 jobs.

Yahoo! 360 was a blogging/social networking service was closed onJuly 13, 2009.

Yahoo! Go, a Java-based phone application with access to most ofYahoo! services, was closed down on January 12, 2010.

Yahoo! Buzz was closed down on April 21, 2011 with no officialannouncement by Yahoo!

In early 2012, after the appointment of Scott Thompson as the new CEO,

many rumors spread about large layoffs looming. On April 4, 2012Yahoo announced a cut of 2,000 jobs or about 14 percent of 14,100workers employed by Yahoo. The cut is expected to save around $375million annually after the layoffs are completed at end of 2012.


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Opportunities weight rate weighted score

Yahoo has huge potential in combining its services withsocial media platforms like Flickr with Facebook

15% 1 0.15

The number of mobile users are constantly increasing in

developing nations. Development of innovative mobileservices will improve the market share

13% 3 0.39

The international market is a huge opportunity for Yahoo!Microsoft and Google are busy carving niches and takingover businesses in and around the Greater China Regionwhich has over 1,200,000,000 citizens. Other economies,

such as India, also offer tremendous growth potential 10% 2 0.2

Threats

Economic downturn (2007) 10% 1 0.10

Yahoos presence in the search engine services is declining

very rapidly because of Google and Bings strong presence

(67% Google, 15.3% Bing) 18% 1 0.18

The advertising market is being slowly grabbed by the socialnetworking sites like Facebook, Myspace,Twitter etc.

20% 2 0.4

Intense competition in every division (Google, Microsoft)14% 2 0.28

Total weighted score 100% 1.7


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Strengths weight rate weighted score

Strong brand recognition worldwide

15% 3 0.45

Ad revenuesworld's largest market share in online display advertising (US

market share for display ads at 17% in 2010)

25% 4 1

Huge product portfolio beside search engine ( yahoo finance,yahoo answers, yahoo mail, yahoo directory, yahoomessenger, yahoo personals, Flickr, yahoo shopping, yahooreal estate, yahoo next, yahoo boss, yahoo meme etc.)

10% 3 0.3

WeaknessesLack of innovative products resulting in fading brand image(Mail services, news, shopping, financial data are providedby many others like MSN, CNN etc.)

15% 1 0.15

Huge layoffs -> staff demotivation (On April 4, 2012 Yahooannounced to cut 2,000 jobs)

10% 1 1.10

Bad financial health (The companys assets both in terms of

intangible and tangible are on the declining side)

25% 2 0.5

Total weighted score 100% 2.5


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IE MATRIX - YAHOO!Inc.

Where asGreen zone - Grow and buildOrange zone - HoldRed zone - Retrenchment / Divestiture


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If Yahoo can't bounce back, morepeople are likely to lose their jobs

and more services could be closed.

In a more extreme scenario, the

company could be sold in its

entirety.

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Final Presentation s.m by Talha (1)