TURNAROUND

MANAGEMENT
BUSINESS GOALS
● MAKING PROFIT
● CUSTOMER SERVICE
● SURVIVAL
● GROWTH
● EMPLOYEE-WELFARE
● QUALITY
● INNOVATE
● RESOURCES
● SOCIETY
IMPORTANCE OF BUSINESS
FEATURES OF BUSINESS
CHARACTERISTICS OF
BUSINESS ORGANISATION
● PROFIT MOTIVE
● TWO-PARTIES
● DISTINCT OWNERSHIP
● LAWFUL BUSINESS
● SEPARATE STATUS & MANAGEMENT
● DEALING WITH GOODS & SERVICES
● CONTINUITY OF BUSINESS OPERATION
● RISK INVOLVEMENT
OBJECTIVES OF BUSINESS
ORGANISATION
BUSINESS ENVIRONMENT
BUSINESS ENVIRONMENT
BUSINESS ENVIRONMENT
FUNCTIONS WITHIN
BUSINESS ORG.
 STRATEGY FOR BUSINESS
ORGANISATION
THE TERM STRATEGY IS DERIVED FROM GREEK WORD ‘STRATEGOS’
WHICH MEANS “GENERAL” STRATEGY IS A VERY OLD CONCEPT IT
INITIATED FROM ARMY & MILITARY PRACTICES

STRATEGY IS A PLAN OR COURSE OF ACTION OR A SET OF

DECISION RULES MAKING PATTERN OR CREATING A COMMON THREAD.

STRATEGY IS ABOUT PLANNING TO REACH A VISION WHICH

DIFFERENTIATES A COMPANY FROM ITS COMPETITORS IN A

POSITIVE WAY

DEFINITION :
AS PER ALFRED CHANDLER, “STRATEGY IS THE DETERMINATION OF
THE BASIC LONG-TERM GOALS AND OBJECTIVES OF AN ENTERPRISE,
AND THE ADOPTION OF COURSE OF ACTION AND THE ALLOCATION
OF RESOURCES NECESSARY FOR CARRYING OUT THESE GOALS.”
IMPORTANCE OF BUSINESS
STRATEGY
IMPORTANCE OF BUSINESS
STRATEGY
IMPORTANCE OF BUSINESS
STRATEGY
IMPORTANCE OF BUSINESS
STRATEGY
STRATEGIC BUSINESS UNIT
IN ORGANIZATIONAL
STRUCTURE
ADVANTAGES &
DISADVANTAGES OF SBU
TYPES OF BUSINESS
ORGANIZATIONS
 GROWTH STRATEGIES
*GROWTH IS A PRECONDITION FOR SURVIVAL OF BUSINESS

*IT REFERS TO INCREASE IN THE TOTAL SALES VOLUME PER ANNUM,

INCREASE IN PRODUCTION CAPACITY, INCREASE IN EMPLOYMENT,
INCREASE IN PRODUCTION VOLUME, INCREASE IN THE RAW
MATERIAL AND POWER.

* GROWTH STRATEGIES MAY BE CLASSIFIED AS:

- VERTICAL GROWTH
- HORIZONTAL GROWTH

*PROBLEMS IN GROWTH :
- SCARCITY OF FUNDS
- RISK
- TECHNOLOGY
- MARKETING
NEED FOR GROWTH OR
FACTORS AFFECTING GROWTH
- SURVIVAL
- ECONOMIES OF SCALE
- OWNER’S MANDATE
- EXPANSION OF THE MARKET
- LATEST TECHNOLOGY
- PRESTIGE & POWER
- GOVERNMENT POLICY
- SELF – SUFFICIENCY
ADVANTAGES OF GROWING
ORGANIZATION
● FOR OBTAINING ECONOMIES OF SCALE
● FOR EXPLOITATION OF BUSINESS OPPORTUNITIES
● FOR FACING COMPETITION
● FOR PROVIDING PROTECTION AGAINST ADVERSE BUSINESS
CONDITIONS
● FOR GAINING ECONOMIC & MARKET POWER
● FOR RAISING PROFITS& CREATING RESOURCES FOR FURTHER
INVESTMENT
● FOR OPTIMUM UTILIZATION OF RESOURCES
● FOR SECURING SUBSIDIES, TAX CONCESSIONS AND OTHER
GOVT. INCENTIVES.
LIMITATION OF GROWING
ORGANIZATION
● FINANCE
● MARKET
● HUMAN RELATIONS PROBLEMS
● MANAGEMENT
● LACK OF KNOWLEDGE
● SOCIAL PROBLEMS
DIFFERENT GROWTH
STRATEGIES
● INTENSIVE GROWTH STRATEGIES
-MARKET PENETRATION
-MARKET DEVELOPMENT
- PRODUCT DEVELOPMENT
● DIVERSIFICATION
- HORIZONTAL
- VERTICAL
- CONCENTRIC / RELATED
- CONGLOMERATE
● MODERNIZATION
● EXTERNAL GROWTH STRATEGY
-MERGERS & ACQUISITIONS/TAKEOVERS
- JOINT VENTURES
INTENSIVE GROWTH
STRATEGIES
INTENSIVE GROWTH STRATEGY OR EXPANSION
INVOLVES RAISING THE MARKET SHARE, SALES
REVENUE AND PROFIT OF THE PRESENT PRODUCT
OR SERVICES. THE FIRM SLOWLY INCREASES ITS
PRODUCTION AND SO IT IS CALLED INTERNAL
GROWTH STRATEGY. IT IS GOOD STRATEGY FOR
FIRMS WITH A SMALLER SHARE OF THE MARKET.
● -MARKET PENETRATION
● -MARKET DEVELOPMENT
● - PRODUCT DEVELOPMENT
DIVERSIFICATION
● A FIRM MAY CHOOSE THE STRATEGY OF DIVERSIFICATION UNDER THE
FOLLOWING SITUATIONS:
● - WHEN DIVERSIFICATION PROMISES GREATER PROFITABILITY THAN
EXPANSION
● - WHEN THE FIRM CANNOT ATTAIN ITS GROWTH TARGET BY THE
STRATEGY OF EXPANSION ALONE
● - WHEN THE FINANCIAL RESOURCES OF THE FIRM ARE MUCH IN EXCESS
OF THE REQUIREMENTS OF EXPANSION
● - WHEN THEY NEED TO ACHIEVE ECONOMIES OF SCALE AND SCOPE
(SYNERGY)
● - HORIZONTAL
● - VERTICAL
● - CONCENTRIC / RELATED
● - CONGLOMERATE
MODERNIZATION
● A FIRM MAY USE THE STRATEGY OF
MODERNIZATION TO ACHIEVE GROWTH.
● MODERNIZATION BASICALLY INVOLVES UP
GRADATION OF TECHNOLOGY TO INCREASE
PRODUCTION, TO IMPROVE QUALITY AND TO
REDUCE WASTAGE AND COST OF PRODUCTION.
● THE WORN OUT AND OBSOLETE MACHINES
AND EQUIPMENT ARE REPLACED BY THE
MODERN MACHINES AND EQUIPMENT.
EXTERNAL GROWTH
STRATEGY
● MERGERS: CAN OCCUR IN TWO WAYS
-ACQUISITIONS/TAKEOVERS
- AMALGAMATION

● - JOINT VENTURES
SURVIVAL STRATEGY
● DIVESTMENT :
AN ORGANIZATION DIVESTS WHEN IT SELLS A BUSINESS UNIT TO
ANOTHER FIRM THAT WILL CONTINUE TO OPERATE IT
● SPIN -OFF:
A FIRM SETS UP A BUSINESS UNIT AS A SEPARATE BUSINESS
THROUGH A DISTRIBUTION OF STOCK OR A CASH DEAL. THIS IS
ONE WAY TO ALLOW A NEW MANAGEMENT TEAM TO TRY TO DO
BETTER WITH A BUSINESS UNIT THAT IS POOR PERFORMER.
● LIQUIDATION:
LIQUIDATION IS THE FINAL RESORT FOR A DECLINING COMPANY.
A SIMPLE SHUT DOWN WILL PREVENT THE OWNERS FROM
THROWING GOOD MONEY AFTER BAD ONCE IT IS CLEAR THAT
THERE IS NO FUTURE FOR THE BUSINESS.
UNIT II -
INDUSTRIAL SICKNESS
● SICK COMPANY :(CONTINUOUS DEFAULT IN REPAYING
DUES & INSTALLMENTS &LOSSES)
1. TO A LAYMAN- A SICK UNIT IS ONE WHICH IS NOT
HEALTHY
2. TO AN INVESTOR: IT IS ONE WHICH IS NOT GIVING
DIVIDENDS
3. TO A BANKER: IT IS A UNIT WHICH HAS INCURRED CASH
LOSSES IN THE PREVIOUS YEAR AND IS ABOUT TO REPEAT
THE SAME PERFORMANCE IN THE CURRENT YEAR.
4. TO AN INDUSTRIALIST: IT IS A UNIT WHICH IS MAKING
LOSSES AND ABOUT TO CLOSE
RESULTS OF SICK COMPANY
● UNDER-UTILIZATION OF PRODUCTIVE
CAPACITY
● LACK OF PRODUCT DEMAND
● LOSS OF REVENUE FOR GOVT. IN VARIOUS
FORMS OF INDIRECT TAXES
● OVER STAFFING
● POSSIBLE LOSS OF EXPORTS
INDUSTRIAL SICKNESS
● AS PER SICK INDUSTRIAL COMPANIES ACT, 1985 (SICA), “SICK
INDUSTRIAL UNIT IS DEFINED AS A UNIT OR A COMPANY (HAVING
BEEN IN EXISTENCE FOR NOT LESS THAN FIVE YEAR)WHICH IS
FOUND AT THE END OF EXCEEDING ITS ENTIRE NET WORTH.” THE
NET WORTH IS CALCULATED AS THE TOTAL OF PAID UP CAPITAL
AND FREE RESERVES LESS PROVISIONS AND EXPENSES(IF ANY).

● SIGNS OF INDUSTRIAL SICKNESS:

- SHORT TERM LIQUIDITY PROBLEM
- REVENUE LOSSES
- OPERATING LOSSES
- MOVING IN THE DIRECTION OF OVER-USE OF EXTERNALCREDIT
CAUSES OF INDUSTRIAL
SICKNESS
STAGES OF SICKNESS
● STAGE I- NORMAL HEALTH
● STAGE II- TENDING TOWARDS SICKNESS
● STAGE III- INCIPIENT SICKNESS
● STAGE IV- FINAL STAGE
IMPACT OR EFFECTS OF
INDUSTRIAL SICKNESS
● IMPACT ON EMPLOYEES
● IMPACT ON SOCIETY
● IMPACT ON RESOURCES
● IMPACT ON RELATED – UNITS
● IMPACT ON INVESTORS
● IMPACT ON ENTREPRENEURSHIP ACTIVITIES
● IMPACT ON BANKS & FINANCIAL INSTITUTIONS
● IMPACT ON GOVERNMENT
● INDUSTRIAL UNREST