RETRENCHMENT STRATEGIES
RETRENCHMENT STRATEGIES
Retrenchment is a
short-run renewal strategy designed to overcome organizational weaknesses that
are contributing to deteriorating performance. It is meant to replenish and
revitalize the organizational resources and capabilities so that the
organization can regain its competitiveness. Retrenchment may be thought as a
minor surgery to correct a problem. Managers often try a minimal treatment
first-cost cutting or a small layoff-hoping that nothing more painful will be
needed to turn the firm around. When performance measures reveal a more serious
situation, more drastic action must be taken to restore
performance.
Retrenchment strategies
call for two primary actions:
1. Cost cutting and
2. Restructuring.
