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Recognizing When Turnaround is a Must
Jagdish B Acharya, Consultant, India
The most important part of the whole exercise is to recognize when / if a turnaround is required or if some path adjustment will do. Doing frequent turnarounds may not be good for an organisation as it has some disruptive effects also.
In my opinion when the profit is continuously going down for more than three terms or is contrary to the general business trend, there is a need for turnaround.
Another method could be using control chart techniques of SQC to recognise if the deviation in profits is significant and needs a turnaround.
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Identifying the Need for a TurnaroundJagdish B Acharya, Consultant, India One of the most common way to know that a turnaround need exists comes from auditors or shareholders through some damning reactions. When the share price falls down drastically, it is a sure sign of need for turnaround. But it may be too late to get fast relief. Let us look at other signs or reports which may point to the first step of need for turnaround action. |
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Factors to Recognize a Need for TurnaroundAmey Bhide, India Other parameters to recognize the need for a turnaround could be decreasing demand or decreasing market share, non-profitable units / businesses proving a drain on profitable units/ businesses, decreasing "new customer business".
A turnaround situation can never happen overnight. The signs are present in terms of information, data, statistics or reports. They are either missed or purposely overlooked by the company management (for reasons best explained by them)
I strongly believe that a need for turnaround is because of management delay in taking quick decisions to simple problems, which, not addressed in time, burgeon into a crisis. |
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