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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:

"Acts of God" - Certain risks may occur and cause irreparable damage (despite proper anticipation and thorough preparation).
Poor Vision / Understanding of the Market
Poor Strategy
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):

Assess the situation and future business viability
Implement emergency steps ("stop the bleeding")
Develop strategic survival plan
Implement the plan, restructuring the business. Survive the crisis
Return to normal operations, profitability and growth
Prepare for departure of turnaround management

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Forum about Turnaround Management

Discussions about Turnaround Management.

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	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 of (...)

Best Practices about Turnaround Management

Here you find the most valuable discussions from the past.

🥇	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 (...)

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🥉	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 (...)

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	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 (...)

	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 adjustm (...)

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	Linear Programming and Turnaround Management In business speak, as I understand it, Turnaround Management (TM) also involves strategic decision making. As such, I se (...)

	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 (...)

	Recovery and Turnaround It is my impression that most recovery and turnaround scenario's are too complex. The true challenge comes trying to cha (...)

Expert Tips about Turnaround Management

Here you will find advices by experts.

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Information Sources about Turnaround Management

Here you will find powerpoints, videos, news, etc.

	Turnaround Management Diagram Corporate Renewal and Restructuring (...)

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