How to turn around a company in decline: a case study approach.

Abstract

There is a growing body of research on turnaround management due to adverse global economic circumstances. Research on turnaround management aims to reduce/eliminate business decline. Reviewing the turnaround management literature revealed that it has not yet been able to provide managers and practitioners with reliable guidance, or a step-by-step guide to assist them through the turnaround process. This research aims to identify the key stages of the turnaround process and to select appropriate turnaround strategies in relation to particular factors, e.g. causes of decline. A phenomenological perspective was adopted in this study to investigate the key turnaround management issues in two multiple case studies, followed by a feedback analysis from interviews with a panel of experts. The first case study comprised of 14 large and medium sized UK food manufacturing companies and used secondary sources of evidence. The second in depth case study involved three companies, using primary evidence through semi-structured interviews. Interviews with turnaround and insolvency practitioners were conducted, to investigate the key issues of the revised model of successful turnarounds in the light of their daily practices and models. A general model and step-by-step guide on how to manage a successful turnaround was developed. The model identifies four key stages (i.e. first, decline; second, analysis of decline; third, formulation, implementation and stabilisation of the turnaround plan and fourth, recovery and return to growth). Once decline is recognised, a leadership decision is made to initiate the turnaround process, identify major obstacles/problems and select the best actions to stop decline and return to full recovery. The turnaround model can assist turnaround managers in evaluating the viability of a company. It also helps analyse a company’s weaknesses and develop strategies: in the short-term to stop decline and stabilise the situation; in the longer-term, to identify a company’s strengths and enhance its competitive advantage to achieve recovery and return to growth.