Turnaround Process: A Multi-Stage Perspective

Prior research on corporate turnaround provides

building blocks for a Model of the Turnaround
Process.
When a firm encounters multiple years of
declining financial performance subsequent to a
period of prosperity
1
1urnaround SlLuaLlon
Cause Severity
1urnaround 8esponse
Retrenchment Phase Recovery Phase
1 (8lbeaulL 1982 Pambrlck SchecLer 1983 Schendel eL al 1976 AammuLo Cameron 1983)
Turnaround Process: A Multi-Stage Perspective
t is important to correctly gauge your
response depending on your situation
on't bring a knife to a gunfight

(eg lmmlnenL
bankrupLcy)
1urnaround SlLuaLlon
Cause Severity
lnLernal lacLors
LxLernal lacLors

(eg decllnlng
sales/marglns)
SuggesLs opetotloos response
SuggesLs sttoteqlc response
8eLrenchmenL
hase
CosL 8educLlon
AsseL 8educLlon
Turnaround Process: A Multi-Stage Perspective
When turnaround situation has been properly
assessed the appropriate response can be
chosen
1urnaround 8esponse
Retrenchment Phase Recovery Phase
CosL 8educLlon
AsseL 8educLlon
Lfflclency
MalnLenance
LnLrepreneural
8econflguraLlon
SLablllLy 8ecovery
llrms ln less
severe slLuaLlons
can achleve
SLablllLy vla cosL
reducLlons
llrms ln more
severe slLuaLlons
musL lmplemenL
cosL asseL
reducLlons Lo
achleve sLablllLy
8rlnglng lL all LogeLher Loglc llow of Model
lnLernal lacLors
LxLernal lacLors
1urnaround SlLuaLlon
Cause Severity

SuggesLs opetotloos response

SuggesLs sttoteqlc response
1urnaround 8esponse
Retrenchment Phase Recovery Phase
CosL
8educLlon
AsseL
8educLlon
Lfflclency
MalnLenance
LnLrepreneural
8econflguraLlon
SLablllLy
8ecovery
(operaLlng)
(sLraLeglc)
llrm has
'flnanclal
cushlon'
1urnaround process !ewels
nternal Causality may be easier to deal
with than External Causality
Severity of situation guides not only
retrenchment response, but speed which it
is activated
'A' model and not 'The' model
Various environmental and internal contexts
may require different turnaround models