MS 25 question 5

What is turnaround management? Describe various steps to be followed in using turnaround management. Give an example where turnaround was used. Briefly describe the organization you are referring to

TURNAROUND MANAGEMENTis a process of devising , executing and managing a plan of corporate renewal. The process involves identifying the key driversof an unstable business and implementing a sustainable recoverychange strategies which rapidly improves the business.THE TURNAROUND MANAGEMENT involves a number of steps:STEP 1.INDENTIFY THE ROOT CAUSES.-sales down due to weak economy.-overly optimistic sales projections-poor strategic choices-high operating costs-high fixed costs that decrease flexibility-insufficient resources-unsuccessful R&D projects-high successful competitor-excessive debt burden-inadequate financial controls.----------------------------------------------STEP 2CONDUCT A SITUATION AUDIT / ANALYSIS.-------------------------------------------------STEP 3DEVELOP A STRATEGIC CORPORATE OBJECTIVE--------------------------------------------------------STEP 4DEVELOP A CORPORATE STRATEGY--------------------------------------------------------------STEP 5DEVELOP A CORPORATE BUSINESS RESTRUCTURING PLANStrategic restructuring: The focus lies on core markets and promising business segments. Corporate divisions destroying value are divested. Operational restructuring: It focuses on leaner organization and leaner processes, on the simplification of manufacturing networks and corporate structures, as well as on maximizing efficiency and effectiveness. Financial restructuring: A combination of cost reduction, more flexible structures, and the development of a sustainable financial concept. -------------------------------------------------------------STEP 6DEVELOP A CHANGE MANAGEMENT PROGRAM--------------------------------------------------------------STEP 7DEVELOP AN EMERGENCY ACTION PLAN.-------------------------------------------------------------STEP 8DEVELOP AN IMPLEMENTATION PLAN.------------------------------------------------------------------THINGS TO REMEMBER:the overall financial situation is as transparent as possible and that the influence of the identified restructuring measures becomes clear, rapid analysis and concept development considering the information needs of the stakeholders are conducted, the most relevant people from the organization are involved in order to achieve acceptance for the implementation of improvements, consistent project management and controlling are established during the implementation phase to ensure that the pursued improvements are actually achieved, all stakeholders are continuously informed and involved in order to identify risks and avoid counterproductive conflicts. ================================================================TURNAROUND MANAGEMENT --CASE STUDYThe organisation I am referring to, was facinga problem of declining sales/ market share for 2 consecutive year.The organization, I am familiar with is a -a large manufacturer/ marketer of safety products-the products are used as [personal protection safety] [ industrial safety]-the products are distributed through the distributors as well as sold directly-the products are sold to various industries like mining/fireservices/defence/as well as to various manufacturing companies.-the company employs about 235 people.-the company has the following functional departments*marketing*manufacturing*sales*finance/ administration*human resource*customer service*distribution*warehousing/ transportation*TQM ==============================================STEP 1.INDENTIFY THE ROOT CAUSES.-poor strategic choices-high operating costs-insufficient resources-high successful competitor-inadequate financial controls.----------------------------------------------STEP 2CONDUCT A SITUATION AUDIT / ANALYSIS.-the demand for the market was growing at 13%-the company sales was growing at 7%-the company was selling directly to the customers, using the salesforce.-lack of adequate product range.-lack of market coverage-lack of skills among the salesforce-demand for technical productsetc etc-------------------------------------------------STEP 3DEVELOP A STRATEGIC CORPORATE OBJECTIVE -go for 20% growth ----per annum over the next 5 years.-enter new market segments. [ 15% additional sales volume]-offer new product [ 15% additional sales volume ]--------------------------------------------------------STEP 4DEVELOP A CORPORATE STRATEGY-restructure the marketing department [ 3 product group management]-to achieve 80% sales through distributors in 5 years time.-to conduct more marketing development for new products.-to train all staff in the product knowledge.etc--------------------------------------------------------------STEP 5DEVELOP A CORPORATE BUSINESS RESTRUCTURING PLANStrategic restructuring: The focus lies on core markets and promising business segments. Corporate divisions destroying value are divested. -3 new product groups.-development a new salesdepartment to develop distributor sales.--------------------------------Operational restructuring: It focuses on leaner organization and leaner processes, on the simplification of manufacturing networks and corporate structures, as well as on maximizing efficiency and effectiveness. Financial restructuring: A combination of cost reduction, more flexible structures, and the development of a sustainable financial concept. -reorganizing the sales territories.-appointment of new distribtors --geographically.-pay for performance systems.-------------------------------------------------------------------------------------------STEP 6DEVELOP A CHANGE MANAGEMENT PROGRAM-implementation of the change management programover the 6 months period.--------------------------------------------------------------STEP 7DEVELOP AN EMERGENCY ACTION PLAN.which included-new product sourcing-new product development-new sales policies development-new distributors policies development-new training for salesforce - to manage the distributors.-new training for customer service staff.-new order processing / servicing system.etc etc-------------------------------------------------------------STEP 8DEVELOP AN IMPLEMENTATION PLAN.A PHASED PROGRAM OF IMPLEMENTATION.==========================================OVER THE NEXT 5 YEARS, THE COMPANY -MAINTAINED A 20 % GROWTH-IMPROVED THE MARKET SHARE SIGNIFICANTLY.-IMPROVED THE CUSTOMER COVERAGE BY 100%-MAINTAINED A STEADY SALES / PROFIT GROWTH.