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:
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:
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):
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 | Interim Management | General Management
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