A Business Encyclopedia

Turnaround Strategy

Definition: The Turnaround Strategy is a retrenchment strategy followed by an organization when it feels that the decision made earlier is wrong and needs to be undone before it damages the profitability of the company.

Simply, turnaround strategy is backing out or retreating from the decision wrongly made earlier and transforming from a loss making company to a profit making company.

Now the question arises, when the firm should adopt the turnaround strategy? Following are certain indicators which make it mandatory for a firm to adopt this strategy for its survival. These are:

  • Continuous losses
  • Poor management
  • Wrong corporate strategies
  • Persistent negative cash flows
  • High employee attrition rate
  • Poor quality of functional management
  • Declining market share
  • Uncompetitive products and services

Also, the need for a turnaround strategy arises because of the changes in the external environment Viz, change in the government policies, saturated demand for the product, a threat from the substitute products, changes in the tastes and preferences of the customers, etc.

Example: Dell is the best example of a turnaround strategy. In 2006. Dell announced the cost-cutting measures and to do so; it started selling its products directly, but unfortunately, it suffered huge losses. Then in 2007, Dell withdrew its direct selling strategy and started selling its computers through the retail outlets and today it is the second largest computer retailer in the world.

Leave a Reply

Your email address will not be published. Required fields are marked *


Related pages

physiological communication barrierswhats rural meanemployees provident fund act 1952sale and leaseback finance leasecost push theory of inflation definitiondescribe ethnocentrismwhat is meant by aptitudemotivation theory vroommarkup on salesdelphi technique in hrmmarket structure monopolistic competitionforeign currency speculationinternal factors affecting marketing environmentrevitalise definitionhow to compute margin of safetydefinition of inventory turnoverexamples of participative leadersmeaning of lessee and lessorqueuing theoryresiduary definitiondouglas mcgregor theory x theory ytechniques of capital budgeting in financial managementdefine queingbudgeting techniquegrapevine communication definitionwhat is expectancy theory of motivationgreen shoe ipobudget line equationwhat is the meaning of delphirevitalize meanscurrent asset turnover ratio formularecurring deposit meaninginstrumentality theoryraymond cattell trait theory of personalitysecondary data sources for market researchmeaning of decoding in communication processwhat is the meaning of kioskmotivation hygiene theory definitionvalue chain analysis inbound logisticsbank cheque definitiondiminishing marginal utility economicsrefresher training objectivesfrederick winslow taylor scientific management theorydefine markup percentagebenchmarking in strategic managementconcept of 6 sigmarequired reserve ratio definitionliabilities in hindimeaning of law of diminishing marginal utilitydefine captivein communication connotative words aremeaning of corporate restructuringemployer meaning in tagalogdefine substitutes economicsconflict defdefinition of emotional barrierscorrelational approach definitiong2g meaningreward power in managementbureaucracy simple definitionsubstitution method definition mathhick defbusiness ethics egoismmeaning of substantiate in hindiwhat is skimming pricing in marketingmarginal costing meaningmanagement styles laissez fairethe meaning of moratoriumreturn on capital employed analysisexamples of collusive oligopolyintrapreneurship definitionstrategic disinvestmentretained earnings meaningwhats random samplingcharacteristics monopoly economicsdefinition of speculatingerg theory alderferdefinition of monopolistic competition