UGC NET Management Previous Year Solved Papers MCQ - January 2017

Retrenchment Strategies : Various external and internal developments create the problems to the prospects of business firms. In declining industries, companies face such risks as falling demand, emergence of more attractive substitutes, adverse government policies, and changing customer needs and preferences. In addition to external developments, there are company specific problems such as inefficient management and wrong strategies that lead to company failures. In such circumstances, the industries, markets and companies face the danger of decline in sales and profit and thereby intend to sub-statically reduce the scope of its activity. For this purpose, the problem areas are identified and the causes of the problems are diagnosed. Then, steps are taken to solve the problems that result in different types of retrenchment strategies. The retrenchment strategies can be of the following forms : 1. Turn around strategy; 2. Divestment strategy; 3. Liquidation strategy
1. Turn around Strategy : Turn around strategy can be referred as converting a loss making unit into a profitable one.
2. Divestment Strategy : Divestment involves the sale of a division or a plant or a unitof one firm to another.
3. Liquidation Strategy : Winding up or liquidation of a company is the complete closing down of the business of a company. Basically, it refers to a proceeding by which a company is permanently dissolved and its assets are then disposed off to pay its debts. Surplus, if any is distributed among the members according to their rights in the company.

Mintzberg has identified the 5 P’s of strategy. Strategy could be: a plan, a pattern, a position, a ploy, or a perspective.
1. A plan, “How do I get there?”
2. A pattern, as emerging out of actions consistent over time.
3. A position, that is, it reflects the decision of the firm to offer particular products or services in particular markets.
4. A ploy, a manoeuvre intended to outwit a competitor.
5. A perspective, that is, a vision and direction, a view of what the company ororganization is to become.

The business strategy usually occurs at the business unit or product level, and it emphasizes the improvement of the competitive position of a corporation’s products or services in the specific industry or market segment served by that business unit. Business strategies may fit within the two overall categories of competitive or cooperative strategies. For example, Apple Computer uses a differentiation competitive strategy that emphasizes innovative products with creative design. The distinctive design and colours of its iMac line of personal computers (when contrasted with the usual beige of the competitor’s products) has successfully boosted the company’s market share and profits. In contrast, Air India followed a cooperative strategy by forming an alliance with Lufthansa Airlines in order to provide global service.