Turnaround management is a group of administration techniques used by organizations in financial distress. Professionals in the field are highly trained and specialize in corporate organization and evaluation. The first goal in most turnaround initiatives is to evaluate and stabilize the business in trouble. Other objectives include realistic operational guidelines and eventual profit growth.
The first step of turnaround management is usually determining why the business is in trouble. SWOT analysis is the industry standard for this assessment. In this method, a company’s strengths (S) and weaknesses (W), as well as any possible opportunities (O) or threats (T) are determined.
The second step of SWOT-based turnaround management is the development of strategies based on the resulting matrix. SO plans, for instance, seek to utilize a company’s strengths while pursuing opportunities. In an example of this type of tactics, a business that lists good reputation as a strength may take advantage of an opportunity to produce a new product. Here, the reputation of the company will likely provide credibility. This could provide a huge marketing advantage over competitive manufacturers.
Between the development and implementation of SWOT tactics, most turnaround management professionals try to identify and fill the most pressing needs of an organization. As the most pressing need of businesses in distress is often money, managers frequently try to balance expenditures and income. Often, this involves personnel restructuring including potential layoffs. Other cost-cutting measures may involve removing unprofitable facilities and products.
Only after a company has been restructured and is financially stable can new business ventures be considered. This phase of turnaround management is often called corporate revitalization. Many of the growth strategies developed during SWOT analysis will be carried out during this stage. Theoretically, the organization should now be fiscally healthy and in a position to take on carefully analyzed risks.
While the ultimate goal of typical turnaround management is financial stability and profit, some businesses may be too far gone to save. In these instances, exit strategies may be developed to reduce the economic impact of the company’s failure. Commonly, the sale of the organization may be the best possible financial outcome. In more dire situations, exit strategies involve the liquidation of company assets and bankruptcy filing.
Most turnaround management professionals work within firms created specifically for this service. While most of these firms charge their clients, several nonprofit firms specializing in corporate renewal are in operation. Many of these firms are for specific regions that are financially at risk.