Emphasis is on speed of change and rapid cost reduction and/or revenue generation. Managers must prioritise things that give quick and significant improvements. Although used interchangeably, restructure is different from turnaround.
Operational Turnaround The focus is on ways of improving the operation of the business and designed to halt the decline.
Strategic Turnaround The focus is on adjusting the strategic focus of the business in terms of its Product/Market profile and halt the decline.
Cost Reduction Strategies
Asset Reduction Strategies
Financial Restructuring Strategies Management and Cultural Change Strategies Revenue Increasing Strategies Product/Market Redefinition Strategies
• Restructure is a course before failure to avoid failure An unsuccessful restructure may be followed by a turnaround.
Turnaround is a course after failure
7 steps of Turnaround:
Crises Stabilization Management Changes Gaining stakeholder support Clarifying the target market Re-focusing Financial Restructuring Prioritization of critical improvement areas
Aim: Regain control over the deteriorating position
Focus: At this time focus remains Cost Reduction Revenue Increase
Turnaround requires proper alignment of causes of decline and the solutions.
Changes at top level management is required
Old management may be seen as the cause of the problem by the stakeholder
Management with experience in turnaround is required
Different approaches and fresh perspectives may be brought by outsiders
In a situation of turnaround it is vital that key stakeholders are kept well informed and a clear picture is sent.
The main stakeholders involve employees, bank of the organisation, shareholder group Assessment of power of different stakeholder