Grand Strategies :

Retrenchment ( Turnaround,
Divestment, Liquidation,
Outsourcing Strategies.)

Group 3 : ( Roll No. 15 – 21)

Roll no. Name Slides no.

A018 Aakansha Jain 03-05

A021 Yugansh Jain 06-10

A017 Vidhi Haria 11-14

A015 Arhata Golecha 15-17

A020 Utkarsh Jain 18-23

A016 Tiya Goyal 24-27

A019 Sonali Jain 28-33

 GRAND STRATEGIES
The grand strategies are the corporate level strategies designed to
identify the firm’s choice with respect to the direction it follows to
accomplish its set objectives. Simply, it involves the decision of
choosing the long term plans from the set of available alternatives.
The Grand Strategies are also called as Master Strategies or
Corporate Strategies.

A018 Aakanksha Jain

A018 Aakanksha Jain
 CASE STUDIES ON
RETRENCHMENT STRATEGY
● Ford’s retrenchment in India

● Zomato acquiring Uber Eats

● Retrenchment strategy of Rallis India

A018 Aakanksha Jain
WHAT IS RETRENCHMENT STRATEGY?

● Retrenchment strategy is a process through which you cut down all of those
products and services that aren’t profiting your business to achieve financial
stability. It also means leaving the market where your business can’t sustain itself
● Typically, the strategy involves withdrawing from certain markets or the
discontinuation of selling certain products or service in order to make a beneficial
turnaround
● In other words, the strategy followed, when a firm decides to eliminate its activities
through a considerable reduction in its business operations, in the perspective of
customer groups, customer functions and technology alternatives, either
individually or collectively is called as Retrenchment Strategy.

A021 - Yugansh Jain

 TYPES OF RETRENCHMENT STRATEGIES:-

1. TURNAROUND STRATEGIES:-

Turnaround strategy is a tool/measure that minimizes the negative trends that impact the
company’s performance. It also goes by the name of management measure that could transform
the sick business into a healthy position.

The way businesses follow this strategy; varies from situation to situation

For example, Dell Technologies stated in 2006 that the company would follow the cost-cutting
strategy by directly selling its products to the customers. The direct sale didn’t work out, and
the company faced a tremendous financial loss.

A021 - Yugansh Jain

TYPES OF RETRENCHMENT STRATEGIES:-
2. DIVESTMENT STRATEGY:-

A large company that has attained many assets, departments, and product divisions analyzes various divisions and
departments’ profitability. Whether they’re contributing to the company’s strategy, or they aren’t.. If they aren’t
achieving the required results, then you cut them loose.

For instance, TATA Group of Companies has got a lot of businesses working under its umbrella. They examine their
business now and then; if they find any business out of the company’s core ideology, they divest it. TATA divested
TOMCO and sold it to Hindustan Levers because it thought detergents and soaps weren’t the company’s core
business.

Reasons for divestment:

i. The business that has been acquired proves to be a mismatch and cannot be integrated within the company

ii. Persistent negative cash flows from a particular business create financial problems for the whole company,

iii. Severity of competition and the inability of a firm to cope with it may cause it to divest.

iv. Technological up gradation is required if the business is to survive but where it is not possible for the firm to
invest in it A021 - Yugansh Jain
 3. LIQUIDATION STRATEGY
It is the extreme level in the retrenchment strategy where you permanently shut down the
business and sell all of your assets. Liquidation is the final option of the problems of any
business because it has serious outcomes
For instance, online e-commerce is losing traffic on its store daily. The expenses are
increasing than the store’s total earning. The management has no other choice but to
liquidate the store and pay off the debt.
The following are the indicators that necessitate a firm to follow this strategy:
· Failure of corporate strategy

· Continuous losses

· Obsolete technology

· Outdated products/processes A021 - Yugansh Jain

REASONS WHY RETRENCHMENT STRATEGY HAPPEN
AND THE REASONS TO ADOPT IT.

● Intense and fierce competition in the market.

● Failing to keep up or adapt to big industry trends and changes
● Less-than-stellar financial years and progressive dips in revenue. This could be attributed to a
great number of reasons, whether it’s unreliable leadership, questionable business decisions
● Tighter, strained budgets due to all of the above

REASONS FOR ADOPTING IT:-

● The management no longer wishes to remain in business either partly or wholly due to
continuous losses and the organisation becoming unviable.
● The environment faced is threatening
● Stability can be ensured by reallocation of resources from unprofitable to profitable
businesses.

A021 - Yugansh Jain

 How to implement Retrenchment
Strategy?
1. Selection

2. Choose an Appropriate Timing

3. Doing it face to face

4. Accepting the results

5. Providing accurate facts and figures

6. Career coaching

A017 Vidhi Haria

 Advantages of retrenchment
1. Cost effective When companies are going through the difficult
phase of tight finances, the retrenchment helps them
meet the expenses. The cost efficiency allows them
not to take debt from the financial institutions.

When a company is going through the

2. Improved performance
retrenchment phase, then all the employees would
start behaving better. Their performance would
continue to improve because they don’t want to
give the employer any reason for firing them.
A017 Vidhi Haria
 Advantages of
retrenchment
3. Protect the employer’s brand & Take Care of Employees

4. Maintain productivity and morale

5. Limit liability

6. Gain profits

A017 Vidhi Haria

 Disadvantages of Retrenchment
1.Losing good employees 22. Criticism
2. Criticism

Despite being strict and fair, screening is The public’s reaction and their families’ hatred
not always up to the mark. In spite of all towards the company would also appear on
the efforts made to save the best of social media and the company will have to
withstand the wave of hatred and criticism
employees, it is impossible to see through coming from all those who were told off so
person to person after all. unceremoniously.

A017 Vidhi Haria

 TURNAROUND STRATEGY
● Turnaround means „making a company profitable again‟.
● It means to transform the sick business into a healthy position.
● It includes:
Reducing Costs
Increasing Revenue
Revision of Strategy

A015 - Arhata Golecha

Features of TURNAROUND examples of TURNAROUND
STRATEGY STRATEGY

● XEROX
● Bringing back your
business.
● Helps sick industrial units.
DELL
● Long - term strategy.
● Utilisation of resources.
● Proper skill is required. NETFLIX

A015 - Arhata Golecha

IMPLEMENTAtION OF TURNAROUND STRATEGY

STEP 1: Diagnosing the problem faced by the

STEP 2: Proper Planning of Turnaround Strategy
company

STEP 3: Communication STEP 4: Availability of Funds

STEP 5: Co-operation STEP 6: Implementation of Strategy or Viability

A015 - Arhata Golecha

 DIVESTMENT
What is Divestment?
Divestment is a form of retrenchment strategy used by businesses when they
downsize the scope of their business activities. Divestment usually involves
eliminating a portion of a business. Firms may elect to sell, close, or spin-off
a strategic business unit, major operating division, or product line. This move
often is the final decision to eliminate unrelated, unprofitable, or
unmanageable operations.

A020- Utkarsh Jain

 Types of Divestments
•Spin-offs - Spin-offs are non-cash and tax-free transactions, when a parent
company distributes shares of its subsidiary to its shareholders. Spin-offs are
most common among companies that consist of two separate and distinct
businesses that have different growth or risk profiles.
•Equity carve-out - Under this, a parent company sells a certain percentage
of the equity in its subsidiary to the public through a stock market offering.
•Direct sale of assets - In this case, a parent company sells assets, such as
real estate or equipment to another party. The sale of assets typically involves
cash and may trigger tax consequences for a parent company if
the assets are sold at a gain.
A020- Utkarsh Jain
 REASONS TO DIVEST

•Small Market share - Firms may divest when their

market share is too small for them to be competitive.
•Availability of better alternatives - Firms are often able to
divert resources from a marginally profitable line of
business to one where the same resources can be used
to achieve a greater rate of return.

A020- Utkarsh Jain

 REASONS TO DIVEST
•Need for increased investment - Rather than invest the monetary
and management resources, firms may elect to divest that portion
of the business.
•Lack of Strategic fit - A common reason for divesting is that the
acquired business is not consistent with the image and strategies
of the firm.
•Source of Funds - - In times of financial difficulty and to keep the
business afloat, businesses sell off their non-core assets.

A020- Utkarsh Jain

Process of Divestment
● Monitoring Portfolio - Management should regularly performs a review
of each business unit and its relevance to the company’s long-term
business strategy.
● Identifying a Buyers - Once a business unit has been flagged for
possible divesting, a buyer needs to be identified for the deal to
proceed.
● Performing Divestment - The divestment itself will encompass various
aspects of the business such as legal ownership, valuation and change
of management, as well as retention and severance of employees.
● Managing the Transition - With a company losing a business unit while
gaining a large cash inflow, it will need to decide where and how to use
the money.
A020- Utkarsh Jain
 Example of Divestment - Ford
Motors
❏ Ford entered India in October 1995 as Mahindra Ford India Limited
(MFIL), a 50-50 joint venture with Mahindra & Mahindra Limited. By
1998, Ford increased its stake from 50% to 78% and renamed the
company to Ford India Pvt. Ltd.
❏ In August 2019, the company reported a 31% decline in sales. Ford India
eventually decided to exit the Indian Market in September 2019.
❏ Ford India ended its independent operations. It went on a Joint Venture
with Mahindra. Ford India transferred its assets to Mahindra, giving
the latter a 51% stake. Ford India still had a 49% stake and
voting rights.
A020- Utkarsh Jain
Tiya Goyal A016
 What does Pharmeasy have in store for the
future?
The future appears quite bright after this great venture's
path-breaking stride. With the acquisition of thyroxine, Pharmeasy’s
value quickly doubled. PharmEasy, India's first online pharmacy
unicorn, is apparently considering an IPO before the end of 2021 or
early next year. Among the many startups, this is without a doubt
one of the most dynamic.

Tiya Goyal A016

 OPportunities for pharmeasy

● Growing internet penetration: Between 2015 and 2019, the CAGR was 18.17 percent. In 2020-25, the number
of internet users is predicted to grow at an annual rate of 8.78 percent. The country's e-commerce business will
benefit directly from increased internet penetration.
● Consumer tastes are shifting: Consumers were already leaning toward e-commerce before the pandemic, but
the pandemic has accelerated acceptance. E-commerce transactions surged by 71.3 percent between April and
September 2020, according to a Razorpay survey. In addition, Tier III areas saw a 53 percent YoY increase in
e-commerce usage in 2020.
● Government initiatives: Programs like the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) are
boosting the sector's growth by broadening the market's scope. The programme strives to ensure that excellent
and inexpensive medicines are available throughout the country

Tiya Goyal A016

Three guidelines for when liquidation may be an especially
effective strategy to pursue are:

A. When an organisation has tried both a retrenchment and a divestiture strategy, but neither
has worked out.
B. When a company's sole option is tosets in an orderly and organised manner. To raise needed
funds, a firm can declare bankruptcy first and then file for bankruptcy. Liquidation is a
method of acquiring the most money for an organization's as liquidate separate segments.
C. When a company's stockholders can reduce their losses by selling the company's assets.

Tiya Goyal A016

 BUsiness model of pharmeasy

A business model is a conceptual structure that supports the viability of the

business and explains who the business serves to, what it offers, how it offers it,
and how it achieves its goals.
Thus, a business model is a description of how a company creates, delivers, and
captures value for the customer as well as itself.

A019 - Sonali Jain

BUSINESS MODEL OF PHARMEASY

● PharmEasy is made Easy.

● Pharm Easy works towards keeping all of their customers informed
● PharmEasy provides a transparent platform so as to provide the best service
possible.
● PharmEasy provides us with the relevant and useful information about our
medicines.

A019 - Sonali Jain

DIStribution network of pharmeasy
PharmEasy is an e-pharmacy, the processes of which are mostly online acting as a
3-way chain between the buyers, suppliers, and the distribution network.

● Buyers - PharmEasy is a ready platform from which the buyers can search for their
medicines or healthcare accessories and buy them online without any hassles.
● Suppliers - PharmEasy collaborates with a wide range of local suppliers and medical
shops, all of which help the company to arrange their stocks and keep them live online.
Besides, the company also earns revenue from various pharmaceutical companies that
want to showcase their products online and on the PharmEasy app as featured brands.
● Distribution channel - PharmEasy operates with a vast distribution spread out all
across the nation. This helps the company to deliver their products for a broad range of
pin codes all over India.

A019 - Sonali Jain

 BUsiness model of pharmeasy

A business model is a conceptual structure that supports the viability of the

business and explains who the business serves to, what it offers, how it offers it,
and how it achieves its goals.
Thus, a business model is a description of how a company creates, delivers, and
captures value for the customer as well as itself.

A019 - Sonali Jain

BUSINESS MODEL OF PHARMEASY

● PharmEasy is made Easy.

● Pharm Easy works towards keeping all of their customers informed
● PharmEasy provides a transparent platform so as to provide the best service
possible.
● PharmEasy provides us with the relevant and useful information about our
medicines.

A019 - Sonali Jain

DIStribution network of pharmeasy
PharmEasy is an e-pharmacy, the processes of which are mostly online acting as a
3-way chain between the buyers, suppliers, and the distribution network.

● Buyers - PharmEasy is a ready platform from which the buyers can search for their
medicines or healthcare accessories and buy them online without any hassles.
● Suppliers - PharmEasy collaborates with a wide range of local suppliers and medical
shops, all of which help the company to arrange their stocks and keep them live online.
Besides, the company also earns revenue from various pharmaceutical companies that
want to showcase their products online and on the PharmEasy app as featured brands.
● Distribution channel - PharmEasy operates with a vast distribution spread out all
across the nation. This helps the company to deliver their products for a broad range of
pin codes all over India.

A019 - Sonali Jain

WHERE DOES PHARMEASY COMPETE?
1. Target Market
2. Services offered by the company
3. Channel of distribution
4. Type of market where the company is present

A017- VIDHI HARIA