Strategic Management

Turnaround Strategy & Case Study

Introduction

Definition: According to Dictionary of Marketing by P.H.Collin “Turnaround Strategy means making the company profitable again.”

Meaning: turnaround Strategy is strategy to convert a loss making unit into a profitable one.

Basically to improve declining sales, market share, profit effected due to internal and/or external factors.

Significance or need

Liquidation Problem

Shortage of cash or liquid assets may be due to less inflow or increasing out flow.

Fall in market share

This is due to heavy competition, ineffective marketing & distribution.

Decline in profits

The profits decline & may also incur losses due to rise in cost or fall in revenue.

Under utilization of resources

Underutilization of resources needs turn around strategy to make it optimum.

High inventory

When the inventory starts to pile up it shows a decline in sale.

Essentials CommunicationGood communication can make the TA more effective, it should be quick clear & complete. Availability of resources. An effective TA requires cash for working capital& fixed assets, skilled human resource to handle new technical job. Leadership A leader must be dynamic & creative person to effectively perform the TA, must be committed & dedicated to management.

Long term approach

The approach of TA shouldn’t be only for short term but for a long term impact.

Review of the situation

Having a review of internal & external situation, knowing SWOT helps in TA.

Support from various parties

To make a TA effective support from employees, suppliers, shareholders, dealer, government, financial institution.

• Viability of business

A business without prospects cannot revive it needs to shut down otherwise.

• Planning & control

To make TA effective, planning internal & external environment and controlling financial & non-financial is essential.

Steps

Setting up of a turn around committee

A TA committee can be formed consisting of top level management personnel & they can appoint a new CEO.

Identifying the causes of losses

The cause of losses may be internal or external factors that must be identified.

Investigation of causes

After identification investigation is held either customer research or dealers surveys to know the cause.

Alternative solutions

Alternative plans like downsizing, divestments, debt-equity swap etc. can be formed.

Analysis of alternative

There must be analysis of benefit & cost of all alternatives.

Selection of best alternatives

A mix can be selected or two three best alternatives on the bases of current situation.

Communication of turnaround strategy

For implementation of a TA communication is must.

Organization & allocation of resources

To implement the TA required resources must be organized.

Implementation

To implement the TA successfully there must be continuous dialogue between TA team & employees.

Review

This is monitoring of implementation, here additional measures can be taken to overcome TA.

THANK YOU

-BY

HARSHA PAUL

M.COM PART 1

A 43

VALIA COLLEGE