Turnaround management- Scope, Importance, Features & Essentials
Scope of Turnaround management
- The turnaround management work list should be prepared in sections, to make it easier to organize the work, as well as to facilitate review and modifications to the list.
- The sections should follow the order of the list of ancillary equipment, such as towers, vessels, drums, fired heaters, heat exchangers, rotating equipment, piping, instruments and electrical, etc.
- Sections for piping, instruments, electrical and miscellaneous work can describe all work which is not specifically associated with any of the major process equipment.
- The work list should describe in sufficient detail the amount of work, both routine preparation as well as inspection and repairs. This will enable the planner to develop a good work scope.
- Routine preparation work consists of required activities which are well-known or can be easily established before the turnaround starts. These activities include:
- Erecting and dismantling scaffolding
- Insulation removal and re-installation
- Staging, mobilization and demobilization
- Cutting blinds
- Installing/removing blinds
- Opening/closing manways
- Installing/removing air movers
- Installing/removing temporary lighting
- Opening/closing of internal manways (trayways)
- Equipment cleaning/decontamination
- Initial equipment inspections
- Hydrostatic testing, other tests
- Non-routine activities include all repair/replacement work, including post-repair inspections, x-rays, hydrotests, stress relieving, etc. These should be included whenever a high probability exists that they will become necessary.
Importance of turnaround management
- Turnaround strategy is applicable to the loss making business unit. It is the act of making a company profitable again. As it is rightly said “Health is Wealth”, when the Business firm is healthy, then only it can be wealthy.
- An investigation of the root causes of failure, and long-term programs are essential to revitalize the organization. Turnaround strategy is a revival measure for overcoming the problem of industrial sickness. It is a strategy to convert a loss making industrial unit to a profitable one.
- Turnaround is a restructuring process that converts the loss-making company into a profitable one. It brings the industrial unit into its original position and stabilize its performance.
- Implementation plays an important role in turnaround management. The success of the turnaround strategy depends on the commitment of the top level management.
- A turnaround is essential to the survival of a failing business. Turnaround is a sustained positive change in the performance of a business to obtain desired results. A successful turnaround is a complex procedure that requires a strong management team and sound business core.
- The turnaround also requires the leadership of a competent management, capital, and trust and support of the company employees and shareholders.
Features of Turnaround Management
- Turnaround involves restructuring. It involves bringing back the sick industrial unit to its original position. Turnaround is aimed at reversing the trend of declining performance of the business firm.
- Turnaround is applicable to sick industrial units who are passing through economic and financial distress.
- Turnaround is a long-term strategy. A sick unit cannot be revived over night. Proper planning and implementation to convert a loss-making unit into a profitable one is a lengthy and a time consuming process.
- A sick unit is not in a position to make optimum utilisation of the resources. Turnaround involves reorganizing of physical, financial and human resources by making optimum utilisation of the available resources.
- Turnaround require co-operation of all the sections of the society such as shareholders, financial institutions, suppliers, employees, customers etc.
- Capital is the lifeblood of every business. Turnaround requires money. Finance is required to implement the plans of restructuring. Sufficient finance is required to undertake further production and remove deficiencies of the business.
- Turnaround is undertaken by both internal experts and outside consultants. A proper skill is required to undertake turnaround strategy.
Essentials of Successful Turnaround Strategy
Turnaround is a complex action, which requires execution of proper planning and support of various groups such as employees, customers, shareholders, financial institutions etc. The following are the essentials of successful turnaround strategy:
Diagnosing the problem:
This is the first step in the restructuring implementation process. To implement turnaround strategy requires diagnosis of the sickness problem. Exact cause of the business failure is to be identified to frame plans for the revival process. Proper screening helps to trap the root cause of the industrial problem.
Proper planning and execution:
Once the evaluation has been completed, the next critical step in a turnaround is turnaround planning. Proper planning is too made regarding resources, time frame and policies to be executed. The sick company needs to hire a Corporate Turnaround Expert with many years of turnaround experience.
Communication is a key factor for success in a business. Turnaround requires rapid response from the shareholders, financial institutions, employees and the company management. Complete, clear and prompt communication is necessary to implement turnaround strategy.
Availability of funds:
The key elements of any turnaround are financial restructuring. Lack of investment leads to low crop yield and huge wastages. Availability of adequate funds brings the sick unit back to good health, by implementing sound financial management and control.
Turnaround requires co-operation from various groups of the business such as employees, shareholders, management, investors, suppliers, creditors etc. It mainly requires the support of the employees as their workload increases.
Viability of business:
Turnaround should be applicable only if there are chances of revival of business firm. Sometimes business may not have bright future, but the survival of such unit may be difficult in the long run.
In such cases, implementation of turnaround strategy is not viable. In short viability of business is an essential requirement of a good turnaround strategy.
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