TURNAROUND

MANAGEMENT AND CSR,

By: Prof. Teena Bharti
 Turnaround Management-Introduction
◦ Everything needs fixing. Nothing is sure except the need to recover.
◦ Turnaround Management gained prominence when there were incidences of the corporate
declines at global scale that caused organization failure.
◦ Turnaround management is the procedure of evaluating an underperforming business to
determine the cause of its problems.
◦ Turnaround management is a process dedicated to corporate renewal. It uses analysis
and planning to save troubled companies and returns them to solvency, and to identify
the reasons for failing performance in the market, and rectify them.
◦ A corporate turnaround may be defined simply as the recovery of a firm’s economic
performance following an existence-threatening decline (Pandit 2000, Walshe
2004).
Turnaround management involves:-
◦ – management review
◦ – root failure causes analysis
◦ – SWOT analysis to determine why the company is failing.

◦ Once analysis is completed, a long term strategic plan and restructuring plan
are created.
◦ Note: Often, this strategy is employed when the business is under financial stress.  However, it is not
necessary to wait till the situation becomes too complicated to commence the turnaround Management 
strategy.
 Why do business fails
Businesses fail because of mismanagement. Sometimes it is denial, sometimes negligence, but it
always results in loss. Mismanagement is most often seen in more than one of multiple areas:
o Autocratic Management, Overextension
o Ineffective, Non-existent Communications
o High Turnover Neglect of Human Resources
o Inefficient Compensation & Incentive Programs
o Company Goals Not Achieved or Understood
o Deteriorating Business, No New Customers
o Inadequate Analysis of Markets & Strategies
o Lack of Timely, Accurate Financial Information
o History of Failed Expansion Plans
o Uncontrolled or Mismanaged Growth
Stages of Turnaround Management Situation
Management (Collard Change Stage
[Leadership]
Analysis Stage
[Viability]

Emergency Business
Action Stage Restructuring
[Crisis Control] Stage [Change]

Return to
Normal Stage
[Going
Concern]
Contd…

Techniques of Turnaround
Management
Retrenchment -The Retrenchment strategy of the
turnaround management describes wide-ranging short-
term actions, to reduce financial losses, to stabilize the
company and to work against the problems, that caused
the poor performance. To reduce scope and the size of a
business through Shrinking Selective Strategy.
◦ – Selling assets
◦ – Abandoning difficult markets
◦ – Stopping unprofitable production lines
◦ – Downsizing
◦ – Outsourcing.
Repositioning- The repositioning strategy, also known
as "entrepreneurial strategy", attempts to generate
revenue with new innovations and change in product
portfolio and market position. This includes
development of new products, entering new markets,
exploring alternative sources of revenue and
modifying the image or the mission of a company.
Replacement -Replacement is a strategy, where top
managers or the Chief Executive Officer (CEO) are
replaced by new ones. This turnaround strategy is
used, because it is theorized that new managers bring
recovery and a strategic change, as a result of their
different experience and backgrounds from their
previous work.
Renewal- With a Renewal a company pursues long-
term actions, which are supposed to end in a
successful managerial performance. The first step here
is to analyze the existing structures within the
organization. This examination may end with a closure
of some divisions, a development of new markets/
projects or an expansion in other business areas.
Hurdles/Challenges of Turnaround
Management
◦ – Design: What type of restructuring is appropriate for dealing with the
specific challenge, problem, or opportunity that the company faces?
◦ – Execution: How should the restructuring process be managed and the many
barriers to restructuring overcome so that as much value is created as possible?
◦ – Marketing: How should the restructuring be explained and portrayed to
investors so that value created inside the company is fully credited to its stock
price?
 CSR-Corporate Social Responsibility
◦ Corporate Social Responsibility is a management concept whereby  companies integrate social and environmental
concerns in their business  operations and interactions with their stakeholders. CSR is generally  understood as being
the way through which a company achieves a balance  of economic, environmental and social imperatives (“Triple-
Bottom-Line-  Approach”), while at the same time addressing the expectations of  shareholders and stakeholders
(UNIDO).
◦ Enactment of Companies Act, 2013 by the Ministry of Corporate Affairs, Government of India was one of the world's
largest experiments of introducing the CSR as a mandatory provision by imposing statutory obligation on Companies to
take up CSR projects towards social welfare activities. This has made India the only country which has regulated and
mandated CSR for some select categories of companies registered under the Act. This CSR Initiative will push the nation
towards achievement of sustainable development goals and public-private partnership in transforming India. 

◦ Key CSR issues: environmental management, eco-efficiency, responsible sourcing, stakeholder engagement, labour
standards and working conditions, employee and community relations, social equity, gender balance, human rights, good
governance, and anti-corruption measures.
Different Names of CSR
 What is CSR?
• Corporate social responsibility (CSR) is a self-regulating
business model that helps a company be socially
accountable—to itself, its stakeholders, and the
public. By practicing corporate social responsibility, also
called corporate citizenship, companies can be conscious
of the kind of impact they are having on all aspects of
society, including economic, social, and environmental.
• The idea of CSR first came up in 1953 when it became
an academic topic in Howard R Bowen’s “Social
Responsibilities of the Business” book. World Business
Council for Sustainable Development defined CSR as
“the continuing commitment by business to behave
ethically and contribute to economic development while
improving the quality of life of the workforce and their
families as well as of the local community and society at
large.
◦ The CSR provision requires affected companies to spend at
least 2 percent of their average net profits made in the
preceding three years on CSR. Companies must set up a
“CSR Committee,” including at least one independent
director who will be appointed to the company's board.
◦ COVID-19 SCENARIO- Amid the COVID-19
(coronavirus) outbreak, the Ministry of Corporate Affairs
 has notified that companies’ expenditure to fight the
pandemic will be considered valid under CSR activities.
Funds may be spent on various activities related to
COVID-19 such as promotion of healthcare including
preventive healthcare and sanitation, and disaster
management. 
Four Broad areas of CSR
 Examples of CSR initiatives
◦ Levi Strauss - Workers Well Being (Levi Strauss is a company dedicated to change this by focusing on empowering
workers financial, health, and family well-being.
◦ And that’s the premise of the Workers Well Being initiative launched by the company in 2011)

◦ Starbucks – C.A.F.E. Practices

◦ The acronym for Starbuck’s CSR initiative stands for Coffee and Farmer Equity (C.A.F.E.)
◦ All coffee purchased by the company meets their standards of quality,
◦ It must be sustainably grown.
◦ Support the farmers. The company requires **suppliers to submit evidence of payments made throughout the coffee supply
chain to demonstrate how much of the price Starbucks pays for green (unroasted) coffee gets to the farmer.
◦ Ensures safe, fair and humane working conditions for workers and providing adequate living conditions.

◦ Tata Group
◦ The Tata Group conglomerate in India carries out various CSR projects, most of which are community improvement and
poverty alleviation programs.
Types of CSR
◦ According to Geoffrey Lantos:3 main types of CSR.
◦ Ethical CSR: It’s about the responsibility to avoid harms or social injuries.
◦ Altruistic CSR: Contributing to the common good at the possible expenses of the
business for altruistic, humanitarian or philanthropic causes.
◦ Strategic CSR: It’s about firm’s social welfare responsibilities that benefit both
the corporation and stakeholders.
BENEFITS OF CSR
◦ The potential benefits of CSR to companies include:
◦ better brand recognition
◦ positive business reputation
◦ increased sales and customer loyalty
◦ operational costs savings
◦ better financial performance
◦ greater ability to attract talent and retain staff
◦ organizational growth
◦ easier access to capital
ENGAGING THE
EMPLOYEES
THROUGH CSR
Conclusion
◦ CSR is the heart and soul of modern corporations and is an important standard
for corporate governance. CSR is an indispensable mechanism for both
increased corporate accountability, profitability and environmental
sustainability. CSR is the pole star for modern corporations in order to
maintain the integrity of moral fabrics both inside and outside the corporation
while conducting socially responsible business.
Thank You