Description
various types of retrenchment strategies like turnaround strategy, captive company strategy, divestment strategy and liquidation strategy. It also lists conditions for turnaround strategies as well as reasons for divesting.
END GAME STRATEGIES
Prof. S. S. Sharma
TYPES OF RETRENCHMENT STRATEGIES
TURNAROUND STRATEGY CAPTIVE COMPANY STRATEGY DIVESTMENT STRATEGY LIQUIDATION STRATEGY
1.
2.
3.
4.
CONDITIONS FOR TURNAROUND STRATEGIES
1. 2. 3. 4. 5. 6. 7.
PERSISTENT NEGATIVE CASH FLOW NEGATIVE PROFITS DECLINING MARKET SHARE
DETERIORATION IN PHYSICAL FACILITIES
OVER-MANNING, HIGH TURN-OVER & LOW MORALE UNCOMPETITIVE PRODUCTS OR SERVICES MISMANAGEMENT
3 WAYS OF MANAGING TURNAROUND
1.
EXISTING CEO & MANAGEMENT TEAM HANDLES THE
ENTIRE
TURNAROUND WITH THE HELP OF A
SPECIALIST CONSULTANT.
2.
REPLACEMENT OF EXISTING TEAM BY AN EXECUTIVE CONSULTANT OR TURNAROUND SPECIALIST.
3.
REPLACING THE CEO, OR MERGING THE SICK UNIT
WITH A HEALTHY ONE.
ACTION PLANS FOR TURNAROUND
?
ANALYSIS OF PRODUCT MARKETS, PRODUCTION PROCESSES, COMPETITION & MARKET SEGMENT POSITIONING.
?
CLEAR THINKING ABOUT THE MARKET PLACE AND PRODUCTION LOGIC
? IMPLEMENTATION OF
PLAN BY TARGET-SETTING,
FEEDBACK & REMEDIAL ACTION.
5 MAIN STEPS FOR A TURNAROUND
1. 2. 3. 4.
CHANGING THE LEADERSHIP REDEFINING STRATEGIC FOCUS ASSET SALES & CLOSURES
IMPROVING PROFITABILITY
1. 2. 3.
LAYOFF OF BLUE & W HITE COLLAR EMPLOYEES INVESTMENT IN LABOUR SAVING EQUIPMENT ASSIGNMENT OF PROFIT RESPONSIBILITY TO INDIVIDUALS & SUB-UNITS BY CHANGE OF ORGANISATIONAL STRUCTURE, IF NECESSARY.
4. 5. 6. 7.
TIGHTENING FINANCIAL CONTROLS. RE-ENGINEERING BUSINESS PROCESSES TO CUT COSTS & BOOST PRODUCTIVITY. CUTTING BACK ON MARGINAL PRODUCTS. INTRODUCING TQM PROCESSES.
5.
ACQUISITIONS
10 ELEMENTS OF TURNAROUND STRATEGY
1. 2. 3. 4. 5. 6. 7.
CHANGES IN TOP MANAGEMENT INITIAL CREDIBILITY-BUILDING ACTIONS NEUTRALISING EXTERNAL PRESSURES INITIAL CONTROL
IDENTIFYING QUICK PAY-OFF ACTIVITIES
QUICK COST REDUCTIONS REVENUE GENERATION
8.
9. 10.
ASSET LIQUIDATION FOR CASH
MOBILISATION OF THE ORGANISATION BETTER INTERNAL COORDINATION
REASONS TO DIVEST
1. 2. 3. 4. 5. 6. 7. 8.
MISMATCHED BUSINESS/ UNVIABLE PROJECT NEGATIVE CASH FLOW CREATING FINANCIAL PROBLEMS INABILITY TO COPE WITH SEVERE COMPETITION INABILITY TO INVEST IN TECHNOLOGICAL UPGRADATION TO ENSURE ORGANISATION’S SURVIVAL BETTER INVESTMENT OPPORTUNITY MUTUAL EXCHANGE OF UNPROFITABLE DIVISIONS COMPULSIONS OF MRTP ACT/ OVERSIZE
REASONS FOR RESISTING LIQUIDATION
1. 2. 3.
MANAGEMENT FEAR FAILURE GOVT. AGAINST DUE TO POLITICAL REPERCUSSIONS T.U.S FEAR LOSS OF EMPLOYMENT
4.
5. 6. 7. 8.
CONTRACTUAL OBLIGATIONS REMAIN INTACT
BUYERS DIFFICULT TO FIND LOW SALE PROCEEDS CREATES BAD REPUTATION FOR BUSINESS GROUP TRAUMATIC EXPERIENCE FOR MANAGERS
THANK YOU FOR LISTENING
doc_711417925.pptx
various types of retrenchment strategies like turnaround strategy, captive company strategy, divestment strategy and liquidation strategy. It also lists conditions for turnaround strategies as well as reasons for divesting.
END GAME STRATEGIES
Prof. S. S. Sharma
TYPES OF RETRENCHMENT STRATEGIES
TURNAROUND STRATEGY CAPTIVE COMPANY STRATEGY DIVESTMENT STRATEGY LIQUIDATION STRATEGY
1.
2.
3.
4.
CONDITIONS FOR TURNAROUND STRATEGIES
1. 2. 3. 4. 5. 6. 7.
PERSISTENT NEGATIVE CASH FLOW NEGATIVE PROFITS DECLINING MARKET SHARE
DETERIORATION IN PHYSICAL FACILITIES
OVER-MANNING, HIGH TURN-OVER & LOW MORALE UNCOMPETITIVE PRODUCTS OR SERVICES MISMANAGEMENT
3 WAYS OF MANAGING TURNAROUND
1.
EXISTING CEO & MANAGEMENT TEAM HANDLES THE
ENTIRE
TURNAROUND WITH THE HELP OF A
SPECIALIST CONSULTANT.
2.
REPLACEMENT OF EXISTING TEAM BY AN EXECUTIVE CONSULTANT OR TURNAROUND SPECIALIST.
3.
REPLACING THE CEO, OR MERGING THE SICK UNIT
WITH A HEALTHY ONE.
ACTION PLANS FOR TURNAROUND
?
ANALYSIS OF PRODUCT MARKETS, PRODUCTION PROCESSES, COMPETITION & MARKET SEGMENT POSITIONING.
?
CLEAR THINKING ABOUT THE MARKET PLACE AND PRODUCTION LOGIC
? IMPLEMENTATION OF
PLAN BY TARGET-SETTING,
FEEDBACK & REMEDIAL ACTION.
5 MAIN STEPS FOR A TURNAROUND
1. 2. 3. 4.
CHANGING THE LEADERSHIP REDEFINING STRATEGIC FOCUS ASSET SALES & CLOSURES
IMPROVING PROFITABILITY
1. 2. 3.
LAYOFF OF BLUE & W HITE COLLAR EMPLOYEES INVESTMENT IN LABOUR SAVING EQUIPMENT ASSIGNMENT OF PROFIT RESPONSIBILITY TO INDIVIDUALS & SUB-UNITS BY CHANGE OF ORGANISATIONAL STRUCTURE, IF NECESSARY.
4. 5. 6. 7.
TIGHTENING FINANCIAL CONTROLS. RE-ENGINEERING BUSINESS PROCESSES TO CUT COSTS & BOOST PRODUCTIVITY. CUTTING BACK ON MARGINAL PRODUCTS. INTRODUCING TQM PROCESSES.
5.
ACQUISITIONS
10 ELEMENTS OF TURNAROUND STRATEGY
1. 2. 3. 4. 5. 6. 7.
CHANGES IN TOP MANAGEMENT INITIAL CREDIBILITY-BUILDING ACTIONS NEUTRALISING EXTERNAL PRESSURES INITIAL CONTROL
IDENTIFYING QUICK PAY-OFF ACTIVITIES
QUICK COST REDUCTIONS REVENUE GENERATION
8.
9. 10.
ASSET LIQUIDATION FOR CASH
MOBILISATION OF THE ORGANISATION BETTER INTERNAL COORDINATION
REASONS TO DIVEST
1. 2. 3. 4. 5. 6. 7. 8.
MISMATCHED BUSINESS/ UNVIABLE PROJECT NEGATIVE CASH FLOW CREATING FINANCIAL PROBLEMS INABILITY TO COPE WITH SEVERE COMPETITION INABILITY TO INVEST IN TECHNOLOGICAL UPGRADATION TO ENSURE ORGANISATION’S SURVIVAL BETTER INVESTMENT OPPORTUNITY MUTUAL EXCHANGE OF UNPROFITABLE DIVISIONS COMPULSIONS OF MRTP ACT/ OVERSIZE
REASONS FOR RESISTING LIQUIDATION
1. 2. 3.
MANAGEMENT FEAR FAILURE GOVT. AGAINST DUE TO POLITICAL REPERCUSSIONS T.U.S FEAR LOSS OF EMPLOYMENT
4.
5. 6. 7. 8.
CONTRACTUAL OBLIGATIONS REMAIN INTACT
BUYERS DIFFICULT TO FIND LOW SALE PROCEEDS CREATES BAD REPUTATION FOR BUSINESS GROUP TRAUMATIC EXPERIENCE FOR MANAGERS
THANK YOU FOR LISTENING
doc_711417925.pptx