StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Turnaround Management - Case Study Example

Cite this document
Summary
The paper 'Turnaround Management' is a wonderful example of a Management Case Study. Turn around management aims to rejuvenate a troubled company and save it from a seriously unprofitable situation to a level of corporate renewal that is profitable (Collin 2016). A successful TMS will be carried out in three stages; assessing viability, stabilization, and strategy development. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97% of users find it useful

Extract of sample "Turnaround Management"

Turnaround Management (Name) (University) Incorrect practices of turnaround management Turn around management aims to rejuvenate a troubled company and save it from a seriously unprofitable situation to a level of corporate renewal that is profitable (Collin 2016). A successful TMS will be carried out in three stages; assessing viability, stabilization and strategy development and implementation and monitoring stage (Bailey, 2013). In the implementation of this process, some incorrect practices are bound to be committed during the transformation process. Signs when a company’s performance is poor exist and many factors can be identified as reasons for the failure (Turnaroundstrategy.net, 2016). According to (Burkner, Faeste & Hemerling, 2015), transformation involves restarting a business to achieve a certain level of maintainable improvement in terms of performance. Resistance to quick decision making Existing managers are generally unreceptive to new ideas which causes the organization to stagnate (Nystrom & Starbuck, 2015). They hesitate to make in-depth changes as they are not conversant with the new methods. The CEO and management are under a lot of pressure because the turnaround has to be implemented alongside with the normal ongoing management coupled with a new set of legal circumstances and risks. The decision making process therefore lags behind as the ongoing problem worsens (Harvey, 2004). . Barker, Patterson and Mueller (2001) are of the idea that replacements are more likely to have an array of new and fresh perspectives as a result of different levels of knowledge and experience. Failure in identification of problem Failure to identify problems that slow down the adoption of precautionary measures later affects employees, customers and suppliers (Slatter & Lovett, 1999). A company experiencing financial crisis may implement turnaround strategies in a bid to restore its viability. In doing so, they neglect the essentials focusing on the non-fundamental issues leading to turnaround failure. Firms whose top managers are quick to make attributions to decline of organization to internal sources more often than not show greater levels of response to declining performance by strategic reorientation (Barker & Barr, 2002). An effective turnaround strategy should be based in identification of critical processes such as cost, time and quality of skills. (Ayieacha & Senaji 2014). Mismatch of skills At a certain point, a company has a pool of skills needed and the skills at hand. Education, formal training coupled together with informal work experience leads to the development of skills that lead to increased productivity (Becker, 1964). The skills at hand are normally lacking crucial skills and may be unable to handle duties that come with the turnaround strategy (Finkin, 1989). When there is inadequacy and inefficiency in skills, the process will be unsuccessful due to lack of proper knowledge and skills to handle the procedure. Improper timing The success rate of any turnaround process will depend on the proper timing. Unsuccessful companies are found to lag behind in taking action in the crisis. (Schreuder, 1993) conducted a research comparing the number, areas and timing of measures implemented by two groups that responded to the crises affecting their industries. He discovered that successful companies in overall took a great number of precautionary measures. Cost cutting measures were more active in the less successful companies. In both groups, 30% replaced their top management (Schreuder 1993). The difference between the successful and unsuccessful was that the successful companies had a tendency in expansion of the middle management, while the less successful took into retrenchment. It is therefore critical to know when the correct time to act to avoid wastage of resources and avoid a turnaround failure. (Hofer, 1980) suggested that the type of response to a decline should fit the original cause of the problem. Cost-cutting and retrenchment According to (Rosario, Kawamura and Peiris, 2004), successful businesses concentrate on competing for quality rather than on costs. In a bid to manage a financial crisis, cutting down on employees may be sought leading to retrenchment. Employees will therefore form some self-protective alliances in order to resist change as others may opt to exit. The most qualified employees with valued skills and mostly irreplaceable experience tend to exit first (Perry, 1986). Instead of assisting the TMS, it sets it back by depriving it of the necessary and required knowledge and skills Failure to protect stakeholder’s interests In an aim to safeguard their interests, powerful stakeholders may take charge in controlling a company destined to fail. This may be caused by a company’s failure to maintain, renew or increase support from stakeholders that is critical for a successful turnaround (Gopinath, 1991). Weathering the storm strategies Top managers may fail to detect crises developing in an organization and simply brush off warnings as erroneous (Ansoff, 1975). They counter the problems by a ‘weather the storm’ strategy such as liquidation of assets, price hikes, credit denial to customers and postponement of investments (Nystrom & Starbuck 2015). Such strategies only work out for a while and when the problems make a reappearance, finding the organization with lesser resources and often inadequate time to act. Emergency strategies taken to address financial crises need to be administered with stabilization plans to ensure a positive cash flow and hence immediate survival (Goodman, 1982). The relation of incorrect (TMS) practices and organizational behavior There exists a linkage between strategy implementation and organizational culture. Culture has a substantial influence on an organization’s strategy (Mantere, 2000; Van Der Maas, 2008; Van Buul, 2010). An organization that has a strong work culture can be a driving force in achieving performance (Ahmadi et al 2012). However, according to (Fisher, Lee and Johns 2004), governance and transparency issues had a major impact on behavior rather than culture. A turnaround can be implemented by the existing team of management (Scherer & Packard, 2013). It is however a challenge for the leadership in place to critic its decision-making techniques and come up with new ones. What may have been the norm may no longer be acceptable or viable. Replacement of key managers is not essential in the success of a turnaround process (Clapham, Schwenk & Caldwell 2005). Patterns of communication matter in this stage and lack of an effective line of communication may necessitate the replacement of a CEO. It is at this point that key players exit and in comes new ones. With the replacement of the top management, a new work culture is likely to be adopted that may not be acceptable by the existing workforce. This is in relation to the slow decision-making by existing key players who are used to the organizational culture and reluctant to change. Performance and effectiveness is linked to organizational culture (Fay & Denison, 2003; Pirayeh, Mahdari, & Nematpour, 2011).Adopting new customs, beliefs and procedures make people question them as they are not backed up by evidence of success. Existing beliefs are more welcomed as they arise from rational analysis and a history of successful experiences (Nystrom & Starbuck, 2015). In the mismatch of skills, it is a global challenge facing most organizations according to a study carried out by BTS; a global strategy implementation firm (Site Staff, 2013). Over educated employees are generally frustrated, less satisfied, have high cases of absenteeism and turnover than their adequately educated counterparts (Butchel, 2002). It therefore leads to the hypothesis that over-education leads to dissatisfaction and harms overall productivity of the organization (Kampelmann & Rycx 2012). It is however a contradictory statement that over-qualified are more productive but less motivated (Mahy, Rycx & Vermeylon 2010). Retrenchment being an important component to recovery from decline (Barker and Mone 1994), should not be a necessary ingredient in the turnaround process. (Hambrick and Schecter 1983) however argued that for growth to be a successful strategy it would be severely challenged by strong competition, cutbacks and restructuring but end up being successful. Other recommendations should be considered as retrenchment has a negative impact on the organizations as remaining employees will be demoralized whereas retrenched employees might spoil the organization’s image by bad mouthing. Retrenchment, repositioning and reorganization make up the 3Rs strategy (Boyne 2004). Its relevance and possible consequences are evaluated to help managers have a deeper understanding on the turnaround process and adopt strategies beneficial to their organizations. Counter strategies that complement TMS Business transformation may take place in different forms; Business process reengineering, performance management, six sigma, corporate restructuring and turnaround management strategy. Each strategy is faced with its own challenges some unique and some common to all. Whichever form is taken, the common end goal is mainly to improve effectiveness and efficiency and make the business profitable. Turnaround management is closely related to business process reengineering because both processes lead to business transformation (Proctor, 2012). While BPR aims at redesigning and redefining existing practices (Gokskoy, 2012), turnaround aims at making the organization profitable. Performance management can also complement TMS as it is closely related since it involves identification of a particular business procedure and modifying it to improve on its efficiency and effectiveness and overall output (Gillikin, 2016). The use of six sigma can also be a complementary strategy to TMS as it aimed at reduction of defects in products and services in order to improve in quality production (Business dictionary 2016). In improving the quality of products and services, profits are also boosted which is also the main aim of TMS. Corporate restructuring is designed to add shareholders’ and creditors’ value in the company (Giddy, 2003). Without proper TMS, shareholders may take charge of the organization hence corporate restructuring aims to secure shareholders’ interests which is also one of the aims of turnaround management. Employee contribution to TMS For an effective project management strategy, the right people with the right skills are crucial. For a turnaround strategy to be successful, a TMS practitioner needs to be academically suitable and well experienced given the high cost involved in turnaround to minimize chances of wastage of resources Integrity Stakeholders rely on the integrity of the management when supporting a business (Gross, 2012). Employees who uphold a high level of integrity will make the TMS easier to implement. Setting the right message within the organization in matters such as financial reporting and accountability at the same time maintaining an open line of communication is critical in its performance. This will set an organization apart from that which lacks ethical employees as stakeholders may still give a chance in situations of decline to organizations that have a high level of integrity. Relevant experience Being hardworking, full of energy and enthusiastic will be of no help when an organization suffers a serious decline that needs restructuring. In-depth knowledge and understanding is paramount in discerning its operating systems and capabilities in order to come up with the right turnaround plan. With the dynamic nature and growth of the business industry in terms of technology, the management needs to ensure that they keep abreast with the new and upcoming trends by offering relevant training to their employees. Employees on the other hand need to play their part by being receptive to the changes since it is a common challenge in the business transformation techniques for employees to be resistant to change for fear of losing their jobs as the management aims at cutting down on operational costs (Samali et al., 2013). Motivation Employees need to stay motivated in the TMS process all through. This is part of the managements’ task to ensure that they adequately compensate the employees by remunerating them as they form an integral part of the turnaround process. The relationships between employees themselves and employees and management need to be healthy to enable a conducive working environment. The development of careers need to be catered for so that an employee does not feel stagnated in a given position for years and remains motivated to work hard for the benefit of the organization. To undertake a turnaround process, employers and employees need to each play their part in the motivation process; employees to work hard and employers to recognize and award the hard work. References Arpi, B. (1999). International Turnaround Management. Palgrave Macmillan Ahmadi et al (2012). Global Business and Management Research. Relationship between Organization Culture and Strategy Implementation. An International Journal Alvesson (1990). On the Popularity of Organization Culture. AstaSociologica. Ayieacha, F & Senaji, T. (2014). Moderating Effect of Organizational Culture on the Implementation of Turnaround Strategy. Bailey, K. (2013). The Three Stages of Turnaround management. Business Strategy Blog. Barker III, V.L., Patterson, P. Jr. and G. Mueller, (2001) “Organizational Causes and Strategic Consequences of the Extent of Top Management Team Replacement During Turnaround Attempts”, Journal of Management Studies, Vol. 38, Issue 2 Barker, V. L., & Mone, M. A. (1994). Retrenchment: Cause of turnaround or consequence of decline? Strategic Management Journal, 15(5), 395-405. Barker, V. L., & Barr, P. S. (2002). Linking top manager attributions to strategic reorientation in declining firms attempting turnarounds. Journal of Business Research Burkner, H., Faeste, L. and Hemerling, J. (2015). The New CEO’s Guide to Transformation: Turning ambition into sustainable results. Becker, G. (19640. Human Capital. National Bureau of Economic Research New York. Bibeault, D., (1982) Corporate Turnaround: How Managers Turn Losers Into Winners, McGraw Hill, New York. Boyne, G. A. (2004). A '3Rs' strategy for public service turnaround: Retrenchment, repositioning and reorganization. Public Money & Management Buchel, F. (2002). Effects of over education on Productivity in Germany: The Firms’ View Point. Economics of Education Review p. 263-275 Businessdictionary.com (2016). Business Dictionary Clapham, S. E., Schwenk, C. R., & Caldwell, C. (2005). CEO perceptions and corporate turnaround. Journal of Change Management Fay, C. F., & Denison, D. R. (2003). Organizational Culture and Effectiveness: Can American Theory be Applied in Russia? Organizational Science Collin, P. (2016). Dictionary of Marketing. Giddy, I (2003). Corporate Financial Restructuring Resources in Finance. Gillikin, J. (2016). What is the Performance Improvement Process? Small Business Demand Media Goodman, S.J., (1982) How To Manage a Turnaround, Free Press, New York. Goksoy, A. (2012). Business Process Reengineering: Strategic Tool for Managing Organizational Change an Application in a Multinational Company. International Journal of Business and Management. Vol 7 No. 2 pg. 89. Gopinath, C., (1991) “Turnaround: Recognizing Decline and Initiating Intervention”, Long Range Planning, Vol. 26, Issue 6, pp. 96–101. Gross, H. (2015). Turnaround Issues - Does Management Have What It Takes? Stuart, Slatter, P., Lovett, D (1999). Corporate Turnaround. Management Inefficiency. Finkin, E. (1989). Company Turnarounds. Tough Hiring and Firing. Fisher, G., Lee, J. and L. Johns, (2004) “An Exploratory Study of Company Turnaround in Australia and Singapore Following the Asia Crisis”, Asia Pacific Journal of Management, Vol. 21 Hambrick, D.C. and S.M. Schecter, (1983) “Turnaround Strategies for Mature Industrial-Product Business Units”, Academy of Management Journal, Vol. 23, Issue 2 Harvey, N. (2004). Managing Turnaround. Accountancy SA, Hofer, C.W., (1980) “Turnaround Strategies”, Journal of Business Strategy, Vol. 1, Issue 1, pp. 19–31. Kang, J. and A. Shivdasani, (1997) “Corporate Restructuring During Performance Declines in Japan”, Journal of Financial Economics, Vol. 46, Issue 1 Kampelmann, S & Rycx, F. (20120. Impact of Education Mismatch on Firm Productivity: Evidence from Linked Panel Data. IZA Discussion Paper No. 7093 p.8 Mantere, S. (2000). Sensemaking in Strategy Implementation. Master Thesis, Helsinki University of Technology, Finland. Mahy, B., Rycx, F. & Vermeylon, G. (2010). Mismatch of Firm Productivity: Do Skills, Technology & Uncertainty Matter. O’Neill, H.M., (1986) “Turnaround and Recovery: What Strategy Do You Need?” Long Range Planning, Vol. 19, Issue 1, pp. 80–88 Pearce II, J.A. and K. Robbins, (1993) “Toward Improved Theory and Research on Business Turnaround”, Journal of Management, Vol. 19, Issue 3 Perry, L.T., (1986) “Least-Cost Alternatives to Layoffs in Declining Industries”, Organizational Dynamics, Vol. 14, Issue 4, pp. 48–61. Pirayeh, N., Mahdari, A. M., & Nematpour, A. M. (2011). Study of Organizational Culture Influence (Based on Dennison's Model) on Effectiveness of Human Resources in Karun Oil & Gas Production Company. Australian Journal of Basic and Applied Sciences Proctor, S. (2012). Business Transformation: Business Process Reengineering vs. Corporate Turnaround. Nystrom, P.C. and W.H. Starbuck, (1984) “To Avoid Organizational Crises, Unlearn”, Organizational Dynamics, Vol. 12, Issue 4, p. 53–65 Nystrom, P & Starbuck, W. (2015). To Avoid Organizational Crises, Unlearn. Social Science Research Network. p. 6 Turnaroundstrategy.net (2016). Turnaround Strategy Ramanujam, V. and J.H. Grant, (1989) “Research on Corporate Decline and Turnaround”, Paper at the Academy of Management Meeting, Washington, D.C. Robbins, D.K. and J.A. Pearce II, (1993) “Entrepreneurial Retrenchment among Small Manufacturing Firms”, Journal of Business Venturing, Vol. 8, Issue 4 Rosario, R. H., Kawamura, T., & Peiris, T. L. (2004). The Coir Fiber Industry in Sri Lanka: Reasons for its decline and possible business turnaround strategies. Agribusiness, p.20. Samali, V., Zlotnikova, I., and Watundu, S. (2013). A Quantitative Analysis of Business Process Reengineering and Organizational Resistance: The Case of Uganda. The African Journal of Information Systems. Volume 5 Issue 1 p. 3 Schendel, D.E. and G.R. Patton, (1976) “Corporate Stagnation and Turnaround”, Journal of Economics and Business, Vol. 28, Issue 3, pp. 236–241. Schreuder, H., (1993) “Timely Management Changes as an Element of Organizational Strategy”, Journal of Management Studies, Vol. 30, Issue 5, pp. 723–738Scherer, A & Packard, H. (2013). Five Key Phases of a Turnaround. Salto Partners. Slatter, S., (1984), “Corporate Recovery: Successful Turnaround Strategies and Their Implementation”, London, Penguin Books Site Staff (2013). How to Attack the Business Skills Mismatch Chief Learning Officer. Van Buul, M. (2010). Successful Strategy Implementation: A job for the Internal Auditor? Master Thesis, University of Amsterdam, Netherlands. Van Der Maas, A. A. (2008). Strategy Implementation in Small Island Community. PhD Thesis, Erasmus University of Rotterdam, Netherlands. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Turnaround Management Case Study Example | Topics and Well Written Essays - 1750 words, n.d.)
Turnaround Management Case Study Example | Topics and Well Written Essays - 1750 words. https://studentshare.org/management/2085711-turnaround-management
(Turnaround Management Case Study Example | Topics and Well Written Essays - 1750 Words)
Turnaround Management Case Study Example | Topics and Well Written Essays - 1750 Words. https://studentshare.org/management/2085711-turnaround-management.
“Turnaround Management Case Study Example | Topics and Well Written Essays - 1750 Words”. https://studentshare.org/management/2085711-turnaround-management.
  • Cited: 0 times

CHECK THESE SAMPLES OF Turnaround Management

Relevance of Henry Fayols Management Today

… The paper "Relevance of Henry Fayol's management Today" is a great example of a case study on management.... management is almost constant in human life.... management is considered a global phenomenon.... The management concept is popular and very widely used in human life.... The paper "Relevance of Henry Fayol's management Today" is a great example of a case study on management....
6 Pages (1500 words) Case Study

The Relevance of Fayols Theories for Todays Managers

… The paper "The Relevance of Fayol's Theories for Today's Managers" is a great example of a management essay.... nbsp;Fayolism is a theory that analyzes and synthesis the role of management in the organization (Brunsson, 2008).... It was through his work that contributed to most theories in management.... The paper "The Relevance of Fayol's Theories for Today's Managers" is a great example of a management essay.... nbsp;Fayolism is a theory that analyzes and synthesis the role of management in the organization (Brunsson, 2008)....
4 Pages (1000 words) Essay

The Management Theories of Henry Fayol

… The paper "The management Theories of Henry Fayol " is a perfect example of a management essay.... nbsp;management is one of the practices which help organizations to improve their performance in the global market.... Every organization should consider its management and develop appropriate strategies that will lead to a competitive advantage.... The paper "The management Theories of Henry Fayol " is a perfect example of a management essay....
9 Pages (2250 words) Essay

Parker Follett and Management

… The paper 'Parker Follett and management" is a good example of a management case study.... The paper 'Parker Follett and management" is a good example of a management case study.... It's important to understand that management is not just for the managers and other leaders but for everyone in the organisation.... Mary Parker Follet has been hailed for her work in management.... Henri Fayol management principles lied on increasing efficiency in the process and came up with 14 principles....
8 Pages (2000 words) Case Study

Adsteel - Problem Identification Analysis

… The paper 'Adsteel - Problem Identification Analysis " is a perfect example of a management case study.... The paper 'Adsteel - Problem Identification Analysis " is a perfect example of a management case study.... Therefore, an HR manager was hired from a larger company, for the purpose of delivering the role and team management....
8 Pages (2000 words) Case Study

The Role of Management in Contemporary Organizations

… The paper 'The Role of management in Contemporary Organizations' is a perfect example of a management Essay.... management is a broad subject that covers a wide scope in terms of leadership and business.... management scholars and theorists such as Frederick Taylor and Henri Fayol made an impact on their contributions to the field of management many years ago.... The paper 'The Role of management in Contemporary Organizations' is a perfect example of a management Essay....
8 Pages (2000 words) Essay

External Environment Analysis of Sony Corporation

… The paper “Sony Corporation  - External Environment, Diversification, Fiscal, Time, and Physical Limitations That Impact the Realization of the Business Goal” is a convincing variant of case study on marketing.... Diversification refers to a strategy that a corporate utilizes with the aim of entering a new industry or market which a given firm is not presently in....
5 Pages (1250 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us