What strategy is being employed when a company stops producing certain products to focus on less capital-intensive options?

The retrenchment strategy is characterized by a company's decision to reduce its overall scope and scale, often involving the withdrawal from certain product lines or markets that require significant capital investment. By stopping the production of certain products, the company can redirect its resources towards less capital-intensive options that may yield better returns or align more closely with its core competencies. This approach is often undertaken when a company seeks to enhance its efficiency, reduce costs, and improve profitability during challenging economic times or when facing intense competition.

This strategy is not about maintaining current operations without significant changes, as seen in a stability strategy, nor is it focused on growth through new markets or products, which aligns with the growth strategy. Additionally, the acquisition strategy involves acquiring other companies or products rather than scaling back. Thus, the retrenchment strategy allows a company to streamline its operations and focus on areas where it can compete more effectively and efficiently.