Critical Thinking Questions - Strategy and Competition Essay

Critical Thinking Questions - Strategy and Competition - Essay Example When an organization is in trouble the management can first think about retrenchment. Retrenchment is about making specific changes through cost and asset reduction to reverse declining profits. When an organization is specifically weak in a strong industry then the management can think about regrouping the strengths and evaluating the strategy at present to make specific changes. This process will highlight the areas that are weak and needs restructuring. Retrenchment helps in slowing down the decline in profits in the short run and in the long run when combined with other proactive strategies helps in the reversal of the profitability position. When the retrenchment strategy does not work, the management can try divestiture. Divestiture means selling off a weaker decision or a part of the organization. When it is distinct that a particular division is responsible for the overall loss of the organization the management can think about divestiture. When both the above said strategies do not work then the last option is the liquidation. Liquidation is recognition of defeat and is a very emotionally challenging strategy. When the damage can be controlled through alternative strategy, liquidation can be the last option. Change in relationships: The relationships within the organizations and with the external environment have changed because of disappearing levels of management. An organization depends on information technology, the internet, organizations are becoming flatter and leadership from top down has become obsolete. Disappearance of geographic distance: Resources are outsourced from companies across the world and formation of strategic partnerships has been enabled only because of internet connectivity. By outsourcing of services and procurement of the resources from the point of origin, cost is saved for the companies. Customer satisfaction: By