100%(1)100% au considerat acest document util (1 vot)
2K vizualizări13 pagini
This document outlines various turnaround strategies that can be used for businesses in crisis or decline. These include turnaround strategies to arrest weaknesses, selling off assets, revising strategies, boosting revenues, cutting costs, using combined actions, liquidation as a last resort, end-game strategies to slowly exit, and fortify-and-defend strategies to strengthen market position against competitors. The key is for management to accurately diagnose problems, determine if recovery is possible, and select the appropriate strategic options to reverse poor performance.
Descriere originală:
Ppt on strategies for weak & crisis ridden businesses
Titlu original
Strategies for Weak & Crisis Ridden Businesses
This document outlines various turnaround strategies that can be used for businesses in crisis or decline. These include turnaround strategies to arrest weaknesses, selling off assets, revising strategies, boosting revenues, cutting costs, using combined actions, liquidation as a last resort, end-game strategies to slowly exit, and fortify-and-defend strategies to strengthen market position against competitors. The key is for management to accurately diagnose problems, determine if recovery is possible, and select the appropriate strategic options to reverse poor performance.
This document outlines various turnaround strategies that can be used for businesses in crisis or decline. These include turnaround strategies to arrest weaknesses, selling off assets, revising strategies, boosting revenues, cutting costs, using combined actions, liquidation as a last resort, end-game strategies to slowly exit, and fortify-and-defend strategies to strengthen market position against competitors. The key is for management to accurately diagnose problems, determine if recovery is possible, and select the appropriate strategic options to reverse poor performance.
Businesses Fortify- Turnaroun and- A firm in an also d Strategy defend ran or declining Strategy competitive position has four basic strategic options. End-Game Fast-Exit or Slow- Strategy Exit Strategy A turnaround strategy is needed when a business is going into crisis; The objective is to arrest and reverse the sources of competitive and financial weakness as quickly as possible. For preparing a situation turnaround strategy; the Turnaround management must first diagnose what lies at the root of poor performance. Strategies for Business in Is it because of the weak economy that the sales are dropping? Crisis Was the competitive strategy not chosen properly? Does operating costs were high? Was there a scarcity of important resources? Had a workable strategy been poorly executed? Was there an overload of debts? ● The second task for the management is to decide whether the business can be served or not.
Some of the root causes of trouble in business are
o low sales growth
Turnaround o Taking too much of debt Strategies for Business in o Inability to use plant capacity due to which there are huge Crisis (Contd..) fixed costs
o Failure of research and development
o Ineffective innovation
o Frequently changing the strategies
o Beaten up by the competitors, etc.
Selling off Assets Cutting these kinds of problems and Revising the existing strategy achieving a successful business Launching efforts to boost revenues turnaround can involve any of the Pursuing cost reduction following options: Combined actions Asset reduction strategies are essential when each flow is a critical consideration and when the most practical ways to generate cash are, 1. Through sale of some of the firm’s assets- (plant & equipment, land, patents, inventories, or profitable subsidiaries. 2. Through retrenchment Selling off Sometimes the assets are not sold by a crisi-ridden Assets firm for unloading the losinng operations but for raising funds to save and strengthen the remaining activities of the business. When weak performance is caused by bad strategy, the task of strategy overhaul can proceed along any of several paths: 1. Shifting to new competitive approach to rebuild the firm’s market position. 2. Overhaul internal operations and functional area strategies to better support the same overall Strategy business strategy; Revision 3. Merging with another firm in the industry and forging a new strategy keyed to the newly merged firm’s strengths. 4. Retrenching into a reduced core of products and customers more closely matched to the firms’s strengths. The best path depends on the existing conditions in the industry, strengths and weaknesses and competitive abilities of the firm. Increasing of revenues always aim at generating and increasing sales volume. There are a number of revenue-building options: price cuts, increased promotion, a higher sales force, added customer services, and quicly achieved product improvements. Attempts to increase revenues and sales volumes Boosting are necessary Revenues 1. It is not possible for the operating budget to maintain a break even and reduce expenses. 2. The key profitability is to make omplete use of existing capacity. If the buyers are not price sensitive because of the variable features of the product then the quickest way to boost short term revenues may be to raise prices other than opt for volume building price cuts. Cost-reduction turnarund strategies work the best when the sick firm’s value chain and cost structure are so flexible that it can allow it to Cutting Cost recover when the costs of the firm are very high when the firm is close to its break-even point when inefficiencies of the firm can be identified and easily corrected. The combination turnaround strategies can be used in unpleasant situations where it is essential to quick actions. Similarly, combined actions are taken when new managers are Combined brought in and are freely allowed to make the actions necessary changes. The tougher the problems, the more likely it is that the solutions will involve multiple strategic initiatives. Closing a crisis-ridden business down and liquidating its assets is sometimes Liquidation- the best and wisest strategy. the Strategy Liquidation can be unpleasant andd of Last Resort painfull due to hardships of job elimination. An end-game, slow-exit or harvesting strategy steers a middle course between preserving the status quo and existing as soon as posssible. The operating budget is chopped to a rock- bottom level; reinvestment in the business is End-game held to a bare minimum. Strategies Capital expenditures for new equipment are put on hold or given low financial priority (unless replacement needs are usually urgent); instead, efforts are made to stretch the life of existing eqpment and make do with present facilities as long as possible. Objectives: 1. Make industry leaders for new firms to enter and for challenges to gain ground. 2. Hold onto present market share 3. Strengthen current market position 4. Protect competitive advantage Strategic options Fortify-and- 1.Increase advertising and R&D Defend 2.Provide higher levels of customer service Strategy 3.Introduce more brands to match rivals’ attributes. 4.Add personalized services to boost buyer loyalty 5.Keep prices reasonable and quality attractive 6.Build new capacity ahead of market demand 7. Invest enough to remain cost competitive 8.Patent feasible alternative technologies 9.Sign exclusive contracts with best suppliers and distributors.