In SC the losses are taken in steps. Each corps has only one step and each Armies or HQ have three steps. when one unit loses all their steps then the unit is destroyed or eliminated from the game.
When an Army or HQ is reduced and loses one step, then it is flipped down and it shows a two step unit with a reduced strength strip.
When an already reduced Army or HQ is further damaged or reduced and have to take a step loss, you have to remove it from the map and instead of it, place a corps of the “only one step class” in the hex where the removed unit was located.
Interestingly, the game has an economy system based on MSPs that allows you not only to improve the technology of your units but also reconstruct entire Armies using steps. To re-build a reduced multi-step unit (showing the reduced strength strip) back up to full strength (3 steps), the Unit Build Chart can be used to add a new corps of the required third type. Note that Infantry Armies, Tank Armies and other Elite Units may require a different composition for the three steps. It also applies to HQ units that require three steps/corps.