Future Business Leaders of America (FBLA) Business Management Practice Test

A company focused on retrenchment is specifically aiming to achieve which of the following?

1. Increase market presence

2. Improve efficiency

3. Reverse negative trends

4. Enter new markets

The correct answer is: Reverse negative trends

A company focused on retrenchment seeks to reverse negative trends as part of its strategy. This approach typically involves reassessing operations and making necessary cutbacks in various areas, whether that pertains to workforce, product lines, or market efforts. The objective of retrenchment is to stabilize the company’s financial position and improve its overall sustainability during challenging times. By concentrating resources on core areas that show potential for improvement, the company aims to halt any downward trajectories and work towards revitalization. In retrenchment scenarios, the focus is primarily on managing existing resources carefully and reallocating them in a way that can help the company bounce back from adversity rather than aggressively pursuing growth or expansion, which would be the case with factors such as increasing market presence or entering new markets. Thus, addressing and reversing negative trends is a fundamental goal of a retrenchment strategy, ensuring the company can set a strong foundation for possible future strategies.