Chapter 1: Turnaround

Definition:
Radical shifting of the performance towards improvement is called as turnaround. It is an attempt to remove various weaknesses & make it strong, stable & profit making. According to P. H. Collin, turnaround means “making a company profitable again”.

Application of turnaround (Characteristics)
1. Method of restructuring an organization. 2. Applicable to loss making/uneconomical/sick units. 3. Objective is to make positive performance. 4. Needs appropriate turnaround package 5. Needs additional investments. 6. Planned strategy required 7. Make optimum utilization of resources 8. Long term strategy 9. Need of co-operation of employees 10. Measurement of result through sales and profitability 11. Combination of strategies 12. Role of consultants

Successful Turnaround (INDICATORS)
1. 2. 3. 4. 5. 6. 7. 8. Increase in the volume of goods produced Increase in the sales Increase in the market share Increase in the profitability Financial stability Satisfactory cash flow position Removal of sickness Optimum utilization of available resources

Need of Turnaround:
1. 2. 3. 4. 5. 6. 7. 8. 9. Negative cash flow or shortage of liquid funds. Lowering/declining of profits Declining of market price Inefficient maintenance of physical facilities Irregular wage payments Frequent breakdowns in production unit Mismanagement of an enterprise Non payments of Interest Declining trend in production.

(3)Follow up shapes for the turnaround strategy. 3. Successful Turnaround Strategy: 1. Appointment of consultant for the execution of turnaround package. Steps for Turnaround Strategy: Providing financial Backing Identification of problems faced by an enterprise. 2. Execution of action plan. Surgical Approach B. Modernization. Turnaround is a team activity.Introducing Turnaround: (1)Creating suitable background for the introduction of turnaround plan /package. 1. 5. C. A. Preparation of comprehensive action plan. B. It requires co operation and participation of all managers & employees in its implementation. (2) Selecting the strategy for the introduction of turnaround. 2. (Approach) A. Relevant to the enterprise Change of management structure Provision of creative leadership Proper planning and execution Adequate cash flow Wide coverage Viability of business . 6. 4. Removal/ replacement of CE till the completion of turnaround process. Execution of turnaround by the existing management team. decentralization & diversification are also covered within turnaround process. 4. 7. Humane Approach. 3.

Bureaucratic management 10. Delay in the implementation of the project 4. Internal reasons 1. Delay in getting any financial assistance. Tough competition in the market 6.Chapter 2: Industrial Sickness Definition: Potentially sick industrial company is a company whose accumulated losses are more than fifty percent or more of its peak net worth during the immediately preceding four financial years. Under utilization of resources 6. Changes in consumer behavior 9. . Changes in technology 8. Shortage of basic recourses like manpower. 5. Heavy expenditure in advertisement. Recession trend/economic conditions 4. rules & regulations 2. External reasons 1. Storage in power supply 10. Adverse Govt. Mismanagement 2. 7. Increase in the cost due to delay in implementation of project. Bad industrial relations 9. Social and political atmosphere around company 5. Diversion of funds 7. Under estimation of the cost of the project 3. Inadequate working capital 11. Reasons for industrial sickness: A. B. Adverse Product price control policy 3. raw material etc. Lack of management depth 8.

Ethics directs human behavior and also differentiates between good and bad. charge price. 3. Etc. right & wrong and between fair & unfair human behavior and actions. 4. pay fair wages to workers. false advertisement. Avoiding of payments of taxes as per existing laws. charging high prices. Avoid exploitation of consumers Avoid profiteering Encourage healthy competition Ensure accuracy Regular tax payments Proper account keeping Fair treatment to employees Keep shareholders informed No discrimination among employees . black marketing. associates of all kind. 6. 5. The term ethic refers to code of conduct that guides an individual while dealing with others. 2. Ethical action means an action. 7. 7. Importance of Business Ethics: 1. 6. which is socially & morally good. Mismanagement of fund. The main reason is seen the purposeful misuse of the fund. short weights. 5. Ethical Practices: Business practices which are legally.Business Ethics: Business ethics encompasses how a person in business deals with the employees. 2. morally and socially fair and consumer friendly are ethical practices. to give them decent treatment and welfare facilities and to give fair return to shareholders. 9. 4. Guidance to businessman Support from employees Creates social consciousness Business expansion Fair business Principles of Business Ethics: 1. Supply goods regularly. Exploitation of child labor & women workers. Certain ethical values such as honesty and fairness are universal & stable over centuries. disregard to labor laws & other rights of employees including right to form trade union. No business can really go to state of sickness if done honestly. Unethical Practices: Supplying inferior quality of goods. Orderly functioning Favorable social image. 3. 8.

7. Businessman have limited respect in the society Businessmen take undue interest in socially undesirable activities. Socially conscious and progressive businessmen support ethical business. 13. Practice fair business 11. Chapter 3: Turnaround Packages Turnaround Packages 1. 12. 4. 14. 2. 3. Limited attention to business ethics Unethical Practices are use extensively Businessman severally criticized due to their unethical practices. Avoid monopoly Fulfill customer rights Accept social responsibility. Role of Trade Union: 1. 3. No bribe. Business Ethics in Indian Context: 1. Formation of code of ethics. Total Quality management Business Reorganization Business Restructuring Modernization Taking up to BIFR . Discourage secret arrangement Service before profit. 15.10. Indian business must be made ethical. Education and Persuasion. 2. 5. 6. 5. 2. 4.

Total Quality management • • • • • Total employee involvement Just in Time (JIT) KAISEN & House Keeping Total Quality Control Total Machine Maintenance Business Reorganization: Characteristics: • • • • • • • • Process of resetting Wide and comprehensive term Lengthy process Necessary for solving problems/difficulties Wide coverage Methods used Responsibility of management Benefits available Business Restructuring: Needs: 1.6. Raising market share 5. 3. Adjustment in the product mix: 2. 4. BIFR (Board for Industrial & Financial Reconstruction) MRTP (Monopolies & Restrictive trade practices Act. 2. . 5. Cordial labor-management relations 7. Important Short Notes: 1. Growth & diversification 8. Modernization of an enterprise 3. 1969) Modernization Business Restructuring Total Quality Management (TQM) Business Reorganizing. Adjustment in the capital structure 4. Reducing financial burden 9. Reducing/avoiding losses 6. Raising turnover 10. Removing sickness. Business Process Reengineering. 6.

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