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
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
Forum discussions about Turnaround Management. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.
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....
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 wi...
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...
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 i...
Financial Distress in Hospitals
FINANCIAL DISTRESS IN FIRMS
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 va...
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 communi...
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 Manageme...
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 situat...
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 ...
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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 fal...
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 co...
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 attach...
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 ...
Change Management, Organizational Change, Turnaround Management When choosing between internal or external change agents, organizations should consider following advantages and disadva...
Analysis of Causes of a Turnaround In the management consulting practices 6 key factors have been identified that are very likely to lead a Company towards...
Turnaround Stages and Strategies Model Hoffman described 5 turnaround strategies in 3 stages in a turnaround:
Source: Harlan D. Platt, Principles of Corpor...
Turnaround Management Implementation Today's complex competitive scenario is stretching the survival abilities of many companies. Meanwhile certain skills an...
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Corporate Renewal and Restructuring Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use.
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