A turnaround is to produce a noticeable and endurable improvement in performance, to turnaround the trend of results from down to up, from not good enough to clearly better, from underachieving to acceptable, to losing to winning. Turnaround management gained prominence when there were incidences of corporate decline at global scale that caused organizational failure. Turnaround can be explained as business firm that faces financial disaster or action taken to prevent the occurrence of that financial disaster.
There are 5 strategies related to turnaround management. These are:-
(a) Human Resource Strategies- The strategies of human resource play a vital role in turning around the sick complex organsiations. The turnaround action pertaining to human resource necessitates people intervention and involvement at all levels. Firms experiencing negative trends of performance typically resort to retrenchment as their most prominent turnaround strategy. The strategies pursued under human resource are: staff reductions, massive re-training of employees, changes in the managerial cadre, including professionalization, financial incentives for employees, information dissemination to all levels, organisational restructuring, including decentralization, and building a new culture within the organisation.
(b) Financial Strategies- The objective of financial strategy in turnaround management is to develop and use the financial competencies of the business as an asset to enhance the competitiveness of the business. Organisations adopt several such financial strategies as reduction in the par value of shares, obtaining loans at low rates of interest, postponement of maturity of debts, and conversion of debt into equity
(c) Marketing Strategies- The role and importance of innovative marketing strategies in corporate turn around has been highlighted by several researchers. The marketing oriented business is customer centric, generates and disseminates market intelligence. Switching from production orientation to market orientation is a critical element in the turnaround because lack of sensitivity towards customer needs and change of tastes were considered to be the major reasons for the decline in sales, fall in market share and accumulation of losses. Initially, it is an elimination process based on the simple criterion of financial performance.
(d) Production/Operations Strategies- Strategies must be selected with due consideration for the specific crisis situation. Scare resources, time pressure and other relevant factors viz., reasons for change, the ways of routine action and the cost of the change influence the type of the strategy. Operating strategies are cures for operating causes while strategic problems should be addressed by the strategic remedies. However, operational failures are rarely addressed with strategic turnaround actions.
(e) Corporate Planning Strategies- Planning is for future course of action either for short-term (annual planning) or a long- term focus (expansion, diversification, research and development and so on). In the context of turnaround management, sickness and downturn are attributed to improper planning. Changes in planning have been considered under long- term when the existing products and services had limited acceptability in the market. Strategic orientation i.e., re-focusing on the core activities, expansion and diversification of business activities are of long-term in nature.
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