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MGT603 - Strategic Management. GDB # 2, Starting Date July 29, 2015, Closing Date July 31, 2015

MGT603 - Strategic Management

Question Title :

Defensive strategies.

Question Description :

 

 

The case:

Panoga Pvt.Ltd. became the first company to achieve its first one million broadband customers. It has always been at the forefront in driving technological revolution to deliver innovative products and services that improve the digital lives of its customers. The Management of Panoga Pvt.Ltd. has been facing a decline in profits since 9 months. According to company’s internal audit report, the management has categorized 11,000 employees as “redundant” whose skills are no longer needed since they operate “outdated” technology. Such workers constitute 21 per cent of the company’s overall strength. Now management has decided to hire consultants to devise an effective strategy for implementing the retrenchment plan.

 

 

The requirement:

As management consultant you are required to guide the management of Panoga Pvt.Ltd. in the following areas:

  • ·         In which cases management should use retrenchment strategy?
  • ·         What would be the benefits of using retrenchment strategy in the organization?

Views: 1816

Replies to This Discussion

As management consultant you are required to guide the management of Panoga Pvt.Ltd. in the following areas:

• In which cases management should use retrenchment strategy?

Ans :
Retrenchment is a corporate level strategy that aims to reduce the size or diversity of an organization. Retrenchment is also reduction in expenditure to become financially stable. Retrenchment strategy is a strategy used by corporates in order to reduce the diversity or to cut the overall size of the operations of the company. This strategy is often used to cut down expenses with the goal of becoming more financially stable business. Typically the strategy involves withdrawing from certain markets or the discontinuation of selling certain products or services in order to make a beneficial turn around.
The injection of new capital, changes in ownership, or changing economic circumstances can often lead to reorganization and restructuring within a company. It is not uncommon for job losses to result, and in some cases it may be the only way for a company to move forward and thrive.

• What would be the benefits of using retrenchment strategy in the organization?

Ans :
1. After cutting the size of organization the expenses will be decreased and increase in profit..
2. Management will have more focus on the performance of employees.
3. Company will ride out the economic turn or they will takeover their mistakes.
4. Return to shareholders will increase.

MGT603. Idea Solution.
Retrenchment strategy is a strategy that is geared towards reducing expenditures; withdraw products or services from the MARKET and to reduce the size of diversity. Retrenching strategy is also known as downsizing and cutback initiatives. The many challenges that are associated with retrenching are as follows:

Growth decline.

Smaller workforce.

Inability to meet consumer demands with smaller workforce.

Lack of diversity.

Decrease in profitability.

Retrenching consequences are "commonly divided into financial, organizational, and ..
A retrenchment strategy is a corporate strategy with a goal of reducing COST and assets. This strategy also diversifies the organization's operations. The expenditure reductions and disinvestment is a swift means for turning around declining financial performance.

Challenges

As mentioned above, a part of the retrenchment strategy is reducing the organization's expenditures. A common way to do this is through workforce reduction. Once the employees know that a retrenchment strategy is being used it can severely reduce morale and motivation because the strategy is often viewed as a threat to their job. This threat of employees loosing their jobs can cause anxiety about their future job prospects within the organization. This means that MANAGEMENTmust work very hard to maintain motivation and morale.

Lack of diversity is also a challenge with retrenchment. Since this strategy reduces operations there will be fewer operations within the organization. Most likely before this strategy is implemented the organization would be engaged in multiple operations, and after retrenchment is implemented there will be a lack of diversity because the operations are reduced.

Retrenchment is a corporate level strategy that aims to reduce the size or diversity of an organization. Retrenchment is also reduction in expenditure to become financially stable. Retrenchment strategy is a strategy used by corporates in order to reduce the diversity or to cut the overall size of the operations of the company. This strategy is often used to cut down expenses with the goal of becoming more financially stable business. Typically the strategy involves withdrawing from certain markets or the discontinuation of selling certain products or services in order to make a beneficial turn around.

Retrenchment is a corporate level strategy that aims to reduce the size or diversity of an organization. Retrenchment is also reduction in expenditure to become financially stable. Retrenchment strategy is a strategy used by corporates in order to reduce the diversity or to cut the overall size of the operations of the company. This strategy is often used to cut down expenses with the goal of becoming more financially stable business. Typically the strategy involves withdrawing from certain markets or the discontinuation of selling certain products or services in order to make a beneficial turn around.

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