PBL TASK 10 : Investor Relations

Problem

Investor Relations

Learning objectives

 1. What are the main characteristics of turnaround strategy ?

 2. Rebuilding trust through communication

 3. Case example

 

1. What are the main characteristics of turnaround strategy ?

 

http://kalyan-city.blogspot.com/2012/08/what-is-turnaround-strategy-meaning.html

Before a viable turnaround strategy can be formulated, one must identify the root cause or causes of the crisis. Frequently encountered causes include:

• Revenue downturn caused by a weak economy
• Overly optimistic sales projections
• Poor strategic choices
• Poor execution of a good strategy
• High operating costs
• High fixed costs that decrease flexibility
• Insufficient resources
• Unsuccessful R&D projects
• Highly successful competitor
• Excessive debt burden
• Inadequate financial controls

http://www.highrockpartners.com/services/turnaround/

While each case is unique, the turnaround process frequently involves the following stages:

1. Management change - consultants may be called in to manage the turnaround of the firm.
2. Situation analysis - a situation analysis is performed to evaluate the prospects of survival. Assuming the firm is worth turning around, depending on the root causes of the distress one or more of the following turnaround strategies may be selected and presented to the board:
   
   • Change of top management
   • Divestment of certain assets
   • Reformulation of strategy
   • Revenue increase
   • Cost reduction
   • Strategic acquisitions
   
   
3. Emergency action plan - achieve positive cash flow as soon as possible by eliminating departments, reducing staff, etc.
4. Business restructuring - once positive cash flow is achieved, the strategic plan is implemented, improving continuing operations, adjusting the product mix and repositioning products if necessary. The management team begins to focus on achieving sustained profitability.
5. Return to normalcy - the company becomes profitable and the changes are internalized. Employees regain confidence in the firm and emphasis is placed on growing the restructured business while maintaining a strong balance sheet.

 

http://www.nhbteam.com/turnarounds.html

 We can summarize everything with a simple picture :

http://kalyan-city.blogspot.com/2012/08/explain-features-of-turnaround-strategy.html

 2. Rebuilding trust through communication

 The art of influencing stakeholders with their disparate interests to support a common plan puts the turnaround practitioner in the realms of psychology and politics.

1. Focus early on building consensus and support within the company

Consensus creates greater efficiency and speed in developing and orchestrating a turnaround strategy.

Early, frequent, and consistent communication with employees can make a big difference in setting the right tone. Eliminating uncertainty caused by a lack of communication can improve morale and help focus efforts on the turnaround.

2. Identify and involve key employees and interact with them

Implementing the plan can be expedited by identifying influential employees to communicate the plan initiatives to the rest of the company and to suppliers, customers, and other stakeholders.

Simple actions can have profound effects on employee morale and, subsequently, on contributions to the effort.

3. Play the roles of educator, counselor, and motivator, never stop communicating
To effectively influence numerous parties with competing interests, a turnaround professional plays many different roles simultaneously. For those who have limited or no exposure to the turnaround process, the turnaround professional must first act as an educator.

4. Manage — and meet — expectations

It’s imperative that a turnaround expert develop a track record of meeting forecasts early on. Being able to predict cash flow and financing needs is a primary objective in the initial stage of a turnaround. 

 

http://www.theleanwayconsulting.com/hierarchy-of-lean-business-needs-tm-communication-trust-alignment-productivity/

3. Case example 

-> "India to be biggest contributor to Nokia’s turnaround strategy"

 

When the Finnish handset giant Nokia announced its global turnaround strategy last year, it was about exploiting the rapidly shifting market for smartphones, profiting from its new partnership with Microsoft and developing services based on its own assets. Now, it turns out that the testing turf of the new strategy is the Indian subcontinent , which is also Nokia's second largest market.

http://timesofindia.indiatimes.com/tech/it-services/India-to-be-biggest-contributor-to-Nokias-turnaround-strategy/articleshow/13081029.cms

 

Sources

http://www.netmba.com/strategy/turnaround/ 

http://www.naijapreneur.com/revive-a-dying-business/

http://kalyan-city.blogspot.com/2012/08/explain-features-of-turnaround-strategy.html

https://hbr.org/2005/02/change-through-persuasion/ar/1

http://www.turnaround.org/Publications/Articles.aspx?objectID=10452

http://www.relationshiptrustturnaround.com/

http://www.theleanwayconsulting.com/hierarchy-of-lean-business-needs-tm-communication-trust-alignment-productivity/ 

http://www.cio.com/article/2440399/it-organization/turnaround-strategies--four-companies--four-crises--four-it-turnaround-strategies-.html

http://www.casestudyinc.com/dell-turnaround-strategy

http://timesofindia.indiatimes.com/tech/it-services/India-to-be-biggest-contributor-to-Nokias-turnaround-strategy/articleshow/13081029.cms