Case 2: Recommendation #1

This is what TSI chose to do. Before you shout "hooray" because you got the "right" answer, read on... TSI did indeed lay off people and "hunker down," keeping in touch and empathizing with its clients, and staying ready the moment that business would pick up for its major clients. However, TSI failed to take into consideration a commitment that the bankrupt theater chains made with their creditors to keep spending to an absolute minimum for two years after coming out of bankruptcy, including putting a moratorium on remodeling and refurbishing, so that they could pay down their debt more quickly. Despite some blockbuster movies, spending levels remained depressed, and TSI suffered even more. Even an effort to sell the company (choice #5) failed because while due diligence was being conducted, the firm's performance got worse and worse and it couldn't stop losing money. Eventually, the deal was called off as the firm's value dropped like a stone.

Of course, no particular option is necessarily the best or worst option, i.e., there is no "right" or "wrong" answer to this case (in the event you were expecting one). When companies choose to change their strategy, they do so only by being persuaded at the time that it makes the most sense. It's an imperfect process at best, witness the many corporate decisions made today that turn out badly, as well as this particular decision that also turned out badly...

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