STRATEGIC MANAGEMENT AND

CORPORATE GOVERNMANCE

TOPIC
TURNAROUND STRATEGY
 INTRODUCTION

The Turnaround Strategy is a retrenchment strategy followed by an organization when it feels that the decision made earlier is
wrong and needs to be undone before it damages the profitability of the company. Turnaround strategy means to convert,
change or transform a loss-making company into a profit making company. It helps the sick company to stand once again in
the market. It tries to reverse the position from declining sales to increasing sales, from weakness to strength, and from an
instability to stability.
 CHARACTERISTIC FEATURES

• Turnaround involves restructuring the sick company.

• It is applicable to a loss-making unit.

• It needs consultation of internal and external experts.

• It is a long and time-consuming process.

• It involves in-depth planning with evidential testing.

• Turnaround involves restructuring the sick company.

• It is applicable to a loss-making unit.

• It needs consultation of internal and external experts .

 OBJECTIVES

• A turnaround is the financial recovery of a poorly performing company, economy, or individual.

• Turnarounds are important as they mark a period of improvement while bringing stability to an entity's future.

• To create a turnaround, an entity must acknowledge problems, consider changes, and develop and implement a problem-
solving strategy.
 ADVANTAGES

• Diagnosing the problem

• Proper planning and execution

• Communication

• Availability of funds

• Viability of business
 DISADVANTAGES

• loss of highly skilled workers may result in a loss of productivity

• low worker morale and poor customer service.

• retrenchment include growth decline

• reduced profits

• smaller workforce

• reduced productivity and inability to meet consumer demand.

 BENEFITS

• Crisis management – Taking control; performing critical cash management; reducing assets; arranging short-term funding;
starting cost-reduction measures.

• New management – Changing CEO, and assessing and changing senior management where required. A change of
management is needed because the CEO was steering the ship leading up to the failure. Changing management sends a
strong message of confidence and change through the business and to external stakeholders.

• Critical process improvement – Improving sales and marketing; making further cost reductions and efficiencies; focusing
on the principles of Eliminate, Automate and Delegate.

• Financial restructuring – Refinancing, reducing assets; making debt and equity changes
• Stakeholder communication — It’s important to engage all stakeholders in the process. Clear, consistent and predictable
information and communication is needed to ensure stakeholders have confidence in the turnaround plan.
• Strategic review — Revisiting the business strategy, and considering divestment, asset reduction, downsizing,
outsourcing or investment.
• Culture and operational changes – Making structural changes in the business; reshuffling, changing or reducing
line/middle management; improving communication strategy.
 CONCLUSION

This study highlighted the importance of establishing the true value of a business in the early stages of the turnaround process.
Verifiers can be used successfully to determine the extent of the problem the difficulties involved and the lack of financial
control. When verifiers are used, it can alleviate the time constraints in a turnaround situation by assisting to assess the real
situation quickly. Verifiers will lead to a better understanding of the cause of decline or distress and will be beneficial for
coping with the psychological effects on managers/owners and personnel.
 BIBLIOGRAPHY

• http://www.transcapital.co.uk/6-quick-steps-to-planning-a-turnaround-strategy/
• https://www.slideshare.net/Tanmayjn234/turnaround-strategy-46002447
• https://www.linkedin.com/pulse/7-elements-successful-business-turnaround-strategy-how-chad-rapsey