Turnaround Management

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Corporate renewal and restructuring during times of financial distress. Explanation of Turnaround Management.


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Turnaround Management

What is Turnaround Management? Description.

Turnaround Management involves the formulation and implementation of a strategic plan and a set of actions for corporate renewal and restructuring, typically during times of severe corporate financial distress. Often with the help of outside turnaround consultants or strategy consultants, a Root Cause Analysis is made and a turnaround plan is devised and executed, assuming that the firm still offers the potential to return to financial solvency, profitability and strategic viability.

Root Causes of Strategic distress

There are just a limited number of root causes for corporate strategic distress:

  1. "Acts of God" - Certain risks may occur and cause irreparable damage (despite proper anticipation and thorough preparation).

  2. Poor Vision / Understanding of the Market

  3. Poor Strategy

  4. Poor Business Model / Execution

More Immediate Causes of Strategic distress

Typically, when these root causes are not dealt with properly, they will cause a range of problems, which can then trigger a corporate crisis:

  • Lack of expertise, experience or education, weak management

  • Market circumstances, weak economy

  • Business economical reasons, earnings crisis

  • Bankruptcy of holding company

  • Board level arguments

  • Fraud, insufficient financial controls

  • Overly optimistic sales projections

  • Financing problems, liquidity crisis, excessive debt burden, undercapitalization

  • Operating cost levels too high

  • Very strong, successful competitor

  • Overinvestment

  • Insufficient resources, underinvestment

Often these triggers are interrelated, and several causes are involved. Slywotzky and Drzik have categorized these triggers in 7 Classes of Strategic Risk.

Steps in a Turnaround Process

The first step in a turnaround process is often to change the top management or leadership of the business and to appoint an experienced  turnaround manager. Often strong, Commanding Leadership or even Charismatic Leadership is exerted. The turnaround process typically consists out of the following key steps (in approximate chronological order):

  1. Assess the situation and future business viability

  2. Implement emergency steps ("stop the bleeding")

  3. Develop strategic survival plan

  4. Implement the plan, restructuring the business. Survive the crisis

  5. Return to normal operations, profitability and growth

  6. Prepare for departure of turnaround management

Turnaround Management Forum
  Financial Distress in Hospitals
The financial managers of a firm in financial distress do not have the financial ability to meet scheduled payments, due to cash flow problems caused by declining asset values (Sun et al., 2014). Carlson, Lewis, and N...
  Turnaround Professional Certification
Does someone know any certifications for shutdown or turnaround professionals other than the PMP. Thanks......
  Turnaround Management in Upstream Oil & Gas Facilities (FPSO Specific)
I am interested in the upstream Oil & Gas facilities turnaround management. This is a major maintenance campaign that often involves the complete overhauls of production equipment, mandatory legislative inspection and performance verification of equi...
  Role of Marketing in Business Turnaround
What is the role that marketers can play in the turnaround of a business? Thanks for your ideas....
  The Value of Interim Managers in the Public Sector
I am a recent member of this forum and wondered if any interim's that have worked in the public sector in the UK would help me out with my online research survey please? It will only take a couple of minutes to complete and will help me build ...
  Does TM Apply to Organizational Departments Also?
Does the concept of "turnaround management" only applies to organization as a whole, or is it also applicable to an organizational department / product / function which is not performing well for a couple of financial cycles?
In my opinio...
  What is Turn Around Time?
Can anyone explain me turn around time...
  Linear Programming and Turnaround Management
In business speak, as I understand it, Turnaround Management (TM) also involves strategic decision making. As such, I see that “making strategic or optimal decision” is an essence of TM.
In Management Science, Linear Programming (LP) is part of...
  Two Dimensions to Turnaround Management
There are two dimensions to turnaround management; who leads it and what are the process stages. We may put who leads on x-axis and put insider at 0 and outsider at 10. Put process stages on y axis with diagnosis at 0 and solution at 10...
  Whatever the Name Tag, Turnaround Management is Desirable
In Kenya, the method goes by the name tag restructuring (often used by the media. Now this 'restructuring' has taken different forms including bringing in consultants or 'technocrats' as often communicated to the public. I shall define TM as a proces...
  Periodic Health Check of Organization and Turnaround Management
In my opinion the sickness of the organization can be pre determined if a health check is periodically done.
We use the profit pool technique to determine the robustness of each profit centre and we also d...
  Turnaround Management and Culture
TM is a challenging process that depends of leadership of the manager and the organizational context to engage success and profitability.
But the cultural context of turnaround management is the most important key to face this challenge. The
  Recovery and Turnaround
It is my impression that most recovery and turnaround scenario's are too complex. The true challenge comes trying to charter and implement a desired course based on inherent complexity. What are your thoughts on this subject?...
  Recognizing When Turnaround is a Must
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.
  Start with Call to Action
I support the idea that turn around mgt be considered a method.
I would highly recommend that the first step be a call to action section - enabling the managers to determine the urgency of the situation. The risk of closing the doors or the loss...
  Turnaround Management in India
I am impressed by the method. Probabily in India this method can be widely applied by outsider intervention in a company, coz my personal experience with few companies make me say so....

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Turnaround Management Education & Events

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Best Practices - Turnaround Management Premium
  Turnaround Management is like Surgery
If an organisation is viewed as a person and its health is taken as its condition then management is the sum of its good practices to keep it healthy, and a turnaround is the treatment when it has fallen sick.
Managers are like doctors wh...
  Use an Insider or an Outsider as a Turnaround Manager?
I wonder, what is preferable? Use an insider for a turnaround, because (s)he knows the complexity of the situation very well, or an outsider, because (s)he can act independently and without any attachments to the current situation and stakeholders?...

Expert Tips - Turnaround Management Premium

What Change Agents Should I Use?

When choosing between internal or external change agents, organizations should consider following advantages and disadvantages of each o...
Usage (application): Change Management, Organizational Change, Turnaround Management

Required Skills of a Turnaround Manager

In his book “Corporate Turnaround: How Managers Turn Losers Into Winners”, D. B. Bibeault mentioned four skills required for a turnaround manag...
Usage (application): Turnaround Management

Driving Factors for a Turnaround

In the management consulting practices 6 key factors have been identified that are very likely to lead a Company towards a critical scenario where a T...
Usage (application): Analysis of Causes of a Turnaround

What Turnaround Strategy is Appropriate?

Hoffman described 5 turnaround strategies in 3 stages in a turnaround:
Usage (application): Turnaround Stages and Strategies Model

Turnaround Management Best Practices

Today's complex competitive scenario is stretching the survival abilities of many companies. Meanwhile certain skills and competencies are emerging in...
Usage (application): Turnaround Management Implementation

Resources - Turnaround Management Premium

Turnaround Management Diagram

Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use. Republishing in intranets, websites, books, ma...
Usage (application): Corporate Renewal and Restructuring


Corporate Turnaround Management


Business Turnaround Management


Corporate Turnaround Management


Business Turnaround Management


Corporate Turnaround Management


Business Turnaround Management


Corporate Turnaround Management


Business Turnaround Management

Compare with Turnaround Management: Strategic Risk Management  |  Root Cause Analysis  |  Business Process Reengineering  |  Acquisition Integration Approaches  |  Leveraged Buy-Out  |  Management Buy-Out  |  Liquidation Value  |  Commanding Leadership  |  Charismatic Leadership

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