When a company covers losses by selling off part of its business, what strategy are they typically implementing?

The chosen strategy of retrenchment is appropriate when a company decides to cover losses by divesting parts of its business. Retrenchment typically involves reducing the scale or scope of a company's operations to improve its financial position and long-term viability. This can include selling off underperforming or non-core assets to cut losses and focus on more profitable areas.

By implementing a retrenchment strategy, the company aims to streamline operations and strengthen its financial base, often in response to declining market conditions, poor performance, or the need to reallocate resources more effectively. This approach is often a temporary measure, allowing the company to stabilize before potentially pursuing future growth opportunities. In contrast, other strategies like stability, growth, or acquisition focus on expanding or maintaining current operational levels rather than cutting back or restructuring.