Question

Serrano, a clothing and apparel company, suffered major losses when one of its warehouses was destroyed in a fire mishap. In an attempt to make up for these losses, it had to sell one of its product lines to a rival company. Which of the following grand strategies was used by Serrano in this scenario?

a. The stability strategy
b. The growth strategy
c. The retrenchment strategy
d. The acquisition strategy

Answer 1

C) The retrenchment strategy

Step-by-step explanation:

A retrenchment strategy takes place when a company starts to lower costs by getting rid of some of its business units. Generally business units that aren't very profitable are sold to competitors, and this way the company can both lower costs and receive some fresh money. This should help the company become more financially stable. For example, General Motors has been selling or closing its unprofitable business units in Europe and Australia in an attempt to increase its net income.