This is a strategy adopted by a company in order to recover from a situation that has led to a decline in the profitability of the business. That is to say, a turnaround strategy is an organization’s fail-safe plan.
Businesses adopt turnaround strategies for different reasons including; low profitability, poor management, wrong decision (like in the case of an acquisition), product defects, quality control, change in policies, and in response to new competition.
Since there are different factors that could push a business into adopting a turnaround strategy, it, therefore, implies that the exact nature of the strategy will depend on the factor being tackled.
For instance, if a company’s market share is threatened by new competition entering the market. Then the company has to take measures to ensure that the threat is eliminated.
These measures could be changing its pricing strategy, coming up with a proprietary product that would give it a competitive edge, aggressive marketing and promotions to boost customer loyalty, etc.
Turnaround strategies are simple yet effective ways a company can instantly change course form a downward spiral. This is why it must be a strategy that can be implemented speedily and promises immediate results.
Examples of turnaround strategies are; downsizing, mergers and acquisitions, sales of assets, change of leadership, and market diversification.