Causes of corporate declineInternal External

Management Competition

Board of Directors Changes in market demand

Inadequate Financial control Technological changes

High Cost Structure Commodity price

Outdated technology Government policy

Lack of marketing capability Strikes

Excessive diversification Bad luck

Loose information systems Social changes

Poor Acquisition Environmental factors

Inappropriate financial policies Industry factors

Overtrading

‘Big’ Prospect or deal

Root Causes

External causes

General Management

Finance and Control

R & D

Operations

Personnel

Turnaround mechanism management Autocratic Conservative

managementGrowth mania

Lack of strategic planning

Neglect of critical

areas

Change in top management X X X X X

Centralized decision making X X

Decentralization with accountability X X X X

Formation of critical staff department X X X

Divestiture X X

Retrenchment X

R&D strengthening X X

Higher staff incentives X

Automation/ Renovation X X

Diversification X X

Aggressive Marketing X X X

New Market Development X X X

Collaboration X X X

Settling Debts X

Sickness Prevention Model

Factor Factor contributing to Sickness

Factor contributing toImmunity from sickness

Financial

Liquidity Debt structureLow

Heavily leveragedpoor credit Worthiness

HighHigh borrowing potential

and good credit rating

Senior management

Skills Narrow, specialized Diverse

Composition Homogeneous Heterogeneous

Size of dominant group of executives Small Large

Age distribution Similar Well distributed

Sickness Prevention Model

Factor Factor contributing to Sickness

Factor contributing toImmunity from sickness

Constituents

Customers and product Dissatisfied, narrow product range Loyal, wide product range

Suppliers Employees Irregular, few alternatives available

Reliable, alternatives available

Government

Grievance ridden, underskilled top down communication, poor

group process

Well motivated, skilled, two way participative,

healthy group processes

CommunitiesSuspicious, Hostile, poor economic infrastructure

and unskilled labour pool

Cooperative, consultative, good infrastructure & huge

pool of labour skills

Other relations Highly dependent on other volatile parties

Low dependency, alternatives available

Sickness Prevention Model

Factor Factor contributing to Sickness

Factor contributing toImmunity from sickness

Technology

Type Single, specialized Multiple, adaptive

Condition Obsolete, poorly maintained Advanced, well maintained

Options None Many

Vulnerability Fails catastrophically Fails gracefully

Utilization High breakeven point Low breakeven point

Production Standardized, cost controlled, inflexible

Flexible by-products and inputs

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• The number of sick MSMEs declined from 1,40,337 (Mar 06) to 1,32,081 (Mar 07)

• Cases