Retrenchment Would Be an Effective Strategy When an Organization

question 37

Multiple Choice

Retrenchment would be an effective strategy when an organization

• A) has shrunk so quickly that major internal reorganization is needed.
• B) is one of the stronger competitors in a given industry.
• C) is plagued by inefficiency, low profitability, poor employee morale, and pressure from stockholders to improve performance.
• D) has decided to capitalize on opportunities, maximize threats, take advantage of strengths, and overcome weaknesses.
• E) does not have a clearly distinctive competence and has failed to meet its objectives and goals consistently over time.

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Definitions:

Common Stock

represents units of ownership in a public corporation, entitling shareholders to vote on corporate matters and receive dividends.

Outstanding Shares

The total shares of stock that are currently owned by all shareholders, including share blocks held by institutional investors and restricted shares owned by company insiders.

Rights Offering

A corporate action in which a company offers existing shareholders the opportunity to buy additional shares directly from the company at a discounted price before the public.

Market Price

The current quoted price for the exchange of an asset or service.