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Difference between Expansion Strategy and Retrenc…

Difference between Expansion Strategy and Retrenchment Strategy

Difference between Expansion Strategy and Retrenchment Strategy

Chiranjibi Mar. 08, 2018

Everyone wants their business to grow.For that, it needs an effective market strategy. An effective strategy sets apart an entity from the crowd. Because of strategies, an entity can work on its opportunities and avoid the threats that prevail in the environment.

But growing always is not the option. At times, a business has to save its resources by reducing its activities. In this sense, there are two types of business growth strategies, one tells us when it's the time to grow whereas the other tells us when to stop. They are expansion strategies and retrenchment strategies.

Expansion Strategies:

In the case of a favourable business environment where are tremendous opportunities for an entity to grow and achieve, the entity can opt for expansion strategy. In doing this, an entity invests its available resources into new projects by substantially increasing the efforts of a business. Introducing a new line of production, extending the services, or further expanding the current line of production can be the measures for expansion strategies.

Retrenchment strategies:

On the other hand, if the market situation is adverse and there is no scope for progress even the scope for sustain in the current market, a entity has to opt retrenchment strategies. Removing a product line, reducing the supply quantum etc are some measures for retrenchment strategies.