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STRATEGIC MANAGEMENT

AND BUSINESS POLICYTHIRD EDITION

Chapter 7Corporate-level strategies:Stability, retrenchment,

and restructuring

AZHAR KAZMI

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Learning objectives

Describe the three types of stability strategies anddiscuss the conditions under which each of them isused

Describe the three types of retrenchment strategies

and discuss the conditions under which each of themis used

Discuss the evolution of a complex network of combination strategies to deal with the changingenvironment

Discuss the rationale of restructuring strategies Examine the restructuring strategies in the Indian

context

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Stability strategies

Stability strategies result fromattempts by an organisation atincremental improvement of functional performance.

No-change strategy

Profit strategy

Pause / proceed-with-cautionstrategy

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Retrenchment strategies

Retrenchment strategy is followedwhen an organisation substantiallyreduces the scope of its activities

Turnaround strategies

Divestment strategies

Liquidation strategies

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Turnaround strategies

Turnaround strategies derive theirname from the action involved, i.e.reversing a negative trend and

turning around the organisation toprofitability.

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 saleor liquidation of a portion of business,or a major division, profit centre orSBU.

Reasons for divestment

Approaches to divestment

Decision to divest 

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Liquidation strategies

Liquidation involves closing down anorganisation and selling its assets.

Why is liquidation difficult or undesirable?

Planned liquidation

Legal aspects of liquidation

Liquidation strategies in Indian context

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Combination strategies

Combination strategies are a mixtureof stability, expansion orretrenchment strategies appliedeither simultaneously (at the sametime in different businesses) orsequentially (at different times in the

same business). Sequential combination

Simultaneous combination

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Corporate restructuring

Corporate- or business-levelrestructuring means changes in thecomposition of an organisation's setof businesses in order to create amore profitable enterprise.

Rationale for restructuring

Restructuring in the Indian context