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Turnaround Defined - Turnaround Strategies & Corporate Restructuring
Strategic Management - Strategy Formulation
Turnaround Defined - Turnaround Strategies & Corporate Restructuring
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Turnaround derives its name from the action involved that is reversing a negative trend.
Turnaround Defined
Turnaround derives its name from the action involved that is reversing a negative trend. Turnaround management refers to the measures, which reverse the negative trends in the performance indicators of the company. In other words, turnaround management refers to the management measures which turn a sick-company back to a be healthy one or those measures which reverse the deteriorating trends of the performance indicators such as falling market share, sales (in constant rupees), and profitability and worsening debt-equity ratio.
During 1970-80 IBM dominated the computer industry world wide particularly the PCS. During early 1990s computer sales were falling. HP, Dell, Compaq, Gateway etc entered the market PC clones in IBM style were offered cheaply by them. Industry experts called IBM “bureaucratic dinosaur” and profits kept on falling in 1992-93. The BOD hired a new CEO, Louis Gerstner to lead a ‘Corporate turn around’ who leads the ‘BIG BLUE’ strategy following the rigid dress code. The work force was reduced to 40%. Emphasis was on quicker decision making and strong customer orientation. The CEO spoke to atleast one customer a day. A new mainframe was released once in a year. PC business increased its market share to 8.9% in 1996. Stock price moved from $ 40 in 1990 to $ 140 in 1996. Revenue increased by 40% and profits rose by 3.6%. IBM is still in the process of turning around.
Gram co, a subsidiary of UK based EMI UK was successful in the early seventies with brand name HU. The cassette boom hit the company and EMI UK reduced its equity from 38.9% to 20%. RPG was given an equity participation of 16%, financial institutions 26%. Udayam Bose was appointed as MD to run on profit sharing that is from credit capital Finance Corporation. Grams co expanded to consumer electronics and cassette making and diversified into domestic kitchen equipment, furniture, pumps and automotives. It planned to revive its packaging section also. However the turnaround is a failure
Turnaround derives its name from the action involved that is reversing a negative trend. Turnaround management refers to the measures, which reverse the negative trends in the performance indicators of the company. In other words, turnaround management refers to the management measures which turn a sick-company back to a be healthy one or those measures which reverse the deteriorating trends of the performance indicators such as falling market share, sales (in constant rupees), and profitability and worsening debt-equity ratio.
Examples of turn around
During 1970-80 IBM dominated the computer industry world wide particularly the PCS. During early 1990s computer sales were falling. HP, Dell, Compaq, Gateway etc entered the market PC clones in IBM style were offered cheaply by them. Industry experts called IBM “bureaucratic dinosaur” and profits kept on falling in 1992-93. The BOD hired a new CEO, Louis Gerstner to lead a ‘Corporate turn around’ who leads the ‘BIG BLUE’ strategy following the rigid dress code. The work force was reduced to 40%. Emphasis was on quicker decision making and strong customer orientation. The CEO spoke to atleast one customer a day. A new mainframe was released once in a year. PC business increased its market share to 8.9% in 1996. Stock price moved from $ 40 in 1990 to $ 140 in 1996. Revenue increased by 40% and profits rose by 3.6%. IBM is still in the process of turning around.
Gram co, a subsidiary of UK based EMI UK was successful in the early seventies with brand name HU. The cassette boom hit the company and EMI UK reduced its equity from 38.9% to 20%. RPG was given an equity participation of 16%, financial institutions 26%. Udayam Bose was appointed as MD to run on profit sharing that is from credit capital Finance Corporation. Grams co expanded to consumer electronics and cassette making and diversified into domestic kitchen equipment, furniture, pumps and automotives. It planned to revive its packaging section also. However the turnaround is a failure
Tags : Strategic Management - Strategy Formulation
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