Turnaround Strategy & Case Study
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Transcript of Turnaround Strategy & Case Study
Strategic Management
Turnaround Strategy & Case Study
Introduction
Definition: According to Dictionary of Marketing by P.H.Collin “Turnaround Strategy means making the company profitable again.”
Meaning: turnaround Strategy is strategy to convert a loss making unit into a profitable one.
Basically to improve declining sales, market share, profit effected due to internal and/or external factors.
Significance or need
Liquidation Problem
Shortage of cash or liquid assets may be due to less inflow or increasing out flow.
Fall in market share
This is due to heavy competition, ineffective marketing & distribution.
Decline in profits
The profits decline & may also incur losses due to rise in cost or fall in revenue.
Under utilization of resources
Underutilization of resources needs turn around strategy to make it optimum.
High inventory
When the inventory starts to pile up it shows a decline in sale.
Essentials CommunicationGood communication can make the TA more effective, it should be quick clear & complete. Availability of resources. An effective TA requires cash for working capital& fixed assets, skilled human resource to handle new technical job. Leadership A leader must be dynamic & creative person to effectively perform the TA, must be committed & dedicated to management.
Long term approach
The approach of TA shouldn’t be only for short term but for a long term impact.
Review of the situation
Having a review of internal & external situation, knowing SWOT helps in TA.
Support from various parties
To make a TA effective support from employees, suppliers, shareholders, dealer, government, financial institution.
• Viability of business
A business without prospects cannot revive it needs to shut down otherwise.
• Planning & control
To make TA effective, planning internal & external environment and controlling financial & non-financial is essential.
Steps
Setting up of a turn around committee
A TA committee can be formed consisting of top level management personnel & they can appoint a new CEO.
Identifying the causes of losses
The cause of losses may be internal or external factors that must be identified.
Investigation of causes
After identification investigation is held either customer research or dealers surveys to know the cause.
Alternative solutions
Alternative plans like downsizing, divestments, debt-equity swap etc. can be formed.
Analysis of alternative
There must be analysis of benefit & cost of all alternatives.
Selection of best alternatives
A mix can be selected or two three best alternatives on the bases of current situation.
Communication of turnaround strategy
For implementation of a TA communication is must.
Organization & allocation of resources
To implement the TA required resources must be organized.
Implementation
To implement the TA successfully there must be continuous dialogue between TA team & employees.
Review
This is monitoring of implementation, here additional measures can be taken to overcome TA.
THANK YOU
-BY
HARSHA PAUL
M.COM PART 1
A 43
VALIA COLLEGE