A strategic turnarounds is a more serious form of external retrenchment and leads to divestment or liquidation. Turnaround strategies derive their name from the actions involved, that is, reversing a negative trend. There are certain conditions or indicators which point out that a turnaround is needed if the organization has to survive. These danger signs are:

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  1. Persistent negative cash flow
  2. Negative profits
  3. Declining market share
  4. Deterioration in physical facilities
  5. Overmanning in physical facilities
  6. Overmanning, high turnover of employees, and low morale
  7. Uncompetitive products or services.
  8. Mismanagement.

 

An organization which faces one or more of these problems is often referred to as a ‘stick’ company.

 

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