Action Plan for Turnaround strategy

A workable action plan for turnaround would involve the following stages:

Stage One – Assessment of current problems:

Stage Two – Analyse the situation

Stage Three – Implementing an emergency action plan

Stage Four – Restructuring the business

Stage Five– Returning to normal

Stage One – Assessment of current problems: The first step is to assess the current problems and get to the root causes and the extent of damage the problem has caused. Once the problems are identified, the resources should be focused toward those areas essential to efficiently work on correcting and repairing any immediate issues.

Stage Two–Analyze the situation and develop a strategic plan: Before you make any major changes; determine the chances of the business’s survival. Identify appropriate strategies and develop a preliminary action plan.  For this one should look for the viable core businesses, adequate bridge financing and available organizational resources. Analyze the strengths and weaknesses in the areas of competitive position. Once major problems and opportunities are identified, develop a strategic plan with specific goals and detailed functional actions.

Stage Three – Implementing an emergency action plan: If the organization is in a critical stage, an appropriate action plan must be developed to stop the bleeding and enable the organization to survive. The plan typically includes human resource, financial, marketing and operations actions to restructure debts, improve working capital, reduce costs, improve budgeting practices, prune product lines and accelerate high potential products.  A positive operating cash flow must be established as quickly as possible and enough funds to implement the turnaround strategies must be raised.

Remember key points

1. Action to stop bleeding and enable survival
2. Plan to enhance functional performance
3. Turn negative cash flow into positive cash flow
4. Raise fund to make turnaround strategy successful

Stage Four – Restructuring the business:

During the turnaround, the “product mix” may be changed, requiring the organization to do some repositioning. Core products neglected over time may require immediate attention to remain competitive. Some facilities might be closed; the organization may even withdraw from certain markets to make organization leaner or target its products toward a different niche.

The ‘people mix’is another important ingredient in the organization’s competitive effectiveness. Reward and compensation systems that encourage dedication and creativity encourage employees to think profits and return on investments.The financial state of the organization’s core business is particularly important. If the core business is irreparably damaged, then the outlook for the entire organization may be bleak. Prepare cash forecasts, analyze assets and debts, review profits and analyze other key financial functions to position the organization for rapid improvement.

Remember key point

1. Productmix
2. people mix
3. Financial mix

Stage Five–Returning to normal: In the final stage of turnaround strategy process, the organization must to show signs of profitability and sings of return on investments. Emphasis is placed on a number of strategic efforts such as carefully adding new products and improving customer service, creating alliances with other organizations, increasing the market share, etc.