Unit 9

• What is the definition of retrenchment?

  Reduction of workforce size or resources
• Why is retrenchment considered a way for a business to adapt?

  It helps save costs and adjust to changes
• How can retrenchment help a business in distress?

  By reducing costs to survive economic downturns
• What is one reason a business might retrench to improve efficiency?

  To remove dis economies of scale
• What does focusing on core competencies involve?

  Outsourcing everything else and focusing on strengths
• How might retrenchment protect a company's share price?

  By signaling confidence to shareholders
• What is a potential negative impact of retrenchment on employees?

  It can lower employee morale
• How can retrenchment affect customer perception?

  It may lead to customer dissatisfaction
• What could happen to a business's market position after retrenchment?

  It could lead to diminished market share
• Why might retrenchment not be the right solution for a business struggling with innovation?

  It could eliminate the innovation team
• What alternative strategies could a business consider instead of retrenchment?

  Changing marketing segments or increasing R&D spend
• What management style change could motivate staff without financial incentives?

  From authoritarian to democratic style
• Is retrenchment always essential for a failing business?

  No, it depends on the root cause of failure
• What are the reasons for retrenchment in a failing business?

  • Cost reduction
  • Improve efficiency
  • Focus on core competencies
  • Protect share price
• What are the potential drawbacks of retrenchment?

  • Low employee morale
  • Customer dissatisfaction
  • Diminished market share
• What scenarios illustrate when retrenchment makes sense?

  1. Excess physical stores and costs
  2. Losing market share to competitors
• What scenarios illustrate when retrenchment does not make sense?

  1. Struggling with innovation
  2. Reducing R&D team size
• What is retrenchment primarily about?

  Reducing costs
• What is one method of retrenchment related to output?

  Reducing output to lower raw material needs
• How does reducing staff size contribute to retrenchment?

  It lowers labor costs
• Why might a company reduce its product portfolio?

  To eliminate unprofitable products
• What is a potential reason for reducing the number of countries a business operates in?

  To minimize losses from unprofitable markets
• Why would a business want to retrench from an unprofitable market?

  Due to low return on capital employed
• What might cause a business to suffer from diseconomies of scale?

  Coordination, communication, or management issues
• What is a core competency?

  Key strengths that differentiate a business
• What is a potential negative impact of retrenchment on economies of scale?

  Loss of technical, purchasing, or managerial economies
• How can retrenchment affect employee motivation?

  It may reduce motivation due to redundancies
• What might be a wider impact of retrenchment on stakeholders?

  Suppliers may become uncertain about future
• What are the functional areas impacted by retrenchment?

  • Marketing
  • Operations
  • Human Resources
  • Finance
• What marketing aspects should be considered during retrenchment?

  Market share, sales growth, brand image
• What operational aspects are affected by retrenchment?

  Efficiency, average unit cost, capacity utilization
• What HR metrics are important during retrenchment?

  Labor turnover, absenteeism, motivation
• How can retrenchment impact finance?

  It may improve cash flow and reduce costs
• What is the effect of retrenchment on cash flow?

  It can improve cash flow by reducing costs
• How does retrenchment affect exchange rate management?

  It reduces focus on exchange rate fluctuations
• What is the minimum efficient scale (MES)?

  Lowest cost per unit of output
• How does retrenchment affect economies of scale?

  It can lead to either economies or diseconomies
• What happens to capacity utilization during retrenchment?

  It may improve by closing low-capacity sites
• What marketing strategies might change during retrenchment?

  Pricing strategies, distribution channels, promotional spend
• What is a potential HR issue during retrenchment?

  Increased absenteeism and turnover rates