STRATEGIC MANAGEMENT AND BUSINESS POLICY

THIRD EDITION

Chapter 7 Corporate-level strategies: Stability, retrenchment, and restructuring

AZHAR KAZMI

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

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 3

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

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
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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

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

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
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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

(c) Dr. Azhar Kazmi 2008