Turnaround Strategy – Emphasizes the improvement of operational efficiency and is probably most appropriate when a corporation’s problems are pervasive but not yet critical. Analogous to a weight reduction diet, the two basic phases of a turnaround strategy are CONTRACTION and CONSOLIDATION.
- Contraction is the initial effort to quickly “stop the bleeding” with a general across the board cutback in size and costs.
- Consolidation, implements a program to stabilize the now-leaner corporation. To streamline the company, plans are developed to reduce unnecessary overhead and to make functional activities cost justified. This is a crucial time for the organization. If the consolidation phase is not conducted in a positive manner, many of the best people leave the organization.
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