Date of submission
Small Business Consulting
According to T.F Schopflocher in the book “How to be a turnaround expert saving troubled companies,” each developing business that is either well managed or poorly established is likely to experience financial seasons, which at times become the biggest challenge to them. In chapter one of the book, the author states clearly that for a company to change its ways of operation to more productive and favorable terms, it has to undergo specific steps which define the turnaround process (Harker, Bishnu, 234). In this paper, the research will be based on a study concerning a manufacturing company. The turnaround process will be used to evaluate its usefulness in solving some of the business challenges.
In our case, this company was experiencing continuous losses and slowly losing most of its regular customers. Earlier, the firm was facing management challenges where most top officials were always conflicting with each other, even in the presence of customers (Finkin, Eugene, 56). Such behavior made many customers switch to other companies, a problem that affected the financial sector and the production or the manufacturing sector. Concerning Schopflocher in turnaround expert saving, the first step of solving business challenges is identifying the ProblemProblem.
The factory became disorganized, where several notices from the control board were brought to them, ordering the company to improve its status in a period not more than six months or else they would be forced to close the firm (Slone, Reuben, 122). As they received several warnings, the firm was experiencing poor management as every official seemed to conflict with each other. Mismanagement led to excess stock where FG and WIP stocks had accumulated for over six months. The stock was rarely counted, and cash forecasting weakened as the sales had fallen badly. The company could not answer complaints from customers concerning late delivery; hence this ignorance led to the loss of more customers. Later on, after thorough research on how to turn around the firm, the management used a simple illustration to the investors and workers how they could still get back on track.
In relation to the book, chapter two states that three main steps may help a falling company rise back to business as usual (Slone, Reuben, 120). The management is requested to emphasize engaging its workers well, giving them psyche, energy, and motivation. The third step is to bear in mind that production should result in profitability. Thus they should focus on getting more profit.
The solution to the Problem
The solution to this ProblemProblem should be clear by comparing the company’s previous happenings and state to the current. The management should consider when the business was going on well to determine what led them to losses (Zimmerman, Frederick, 110). In our case, we experienced some problems in the management, meaning that a few of the top managers are not qualified enough to be given the task. The stakeholders should decide which managers should be fired so that the rest may work in peace. Sales are connected with all stages of production, meaning that an excellent plan should be put in the production sector so that sales would go up (Finkin, Eugene, 53). The management should draw a strategic plan to be integrated with all other sectors in the firm for a better product. A team overseeing the impact of the changes should be delegated, where they have to check the effectiveness of all plans introduced during the firm’s revival.
The financial system is another crucial sector in all businesses. Therefore, the firm should first ensure that they have a rigid or detailed report at the end of every month, so that summation at the end of the year would be easy for the firm. As a manager, one is expected to be close to the employees to observe their interests and problems too (Zimmerman, Frederick, 107). The management left in the manufacturing firm should be encouraged to stay close to their employees to help return the firm into its original financial state. According to lessons from the book, after making a thorough comparison of costs, the managers should be encouraged to treat the employees as the most valuable objects of success in a firm.
Information technology is now evident in most firms; therefore, the management should develop a well-connected IT system that will help the company in planning, efficiency, processing of data, and its storage, too (Finkin, Eugene, 49). Money forecasting should also be introduced back to the system, where specific targets should be set for the firm to try to sell out its stock faster to pay up for the losses made. Safety is also crucial in reviving businesses. This means that managers should guard WIP together with ASIs and ensure the removal of FLTs is done before the monthly meeting.
According to Schopfloper, the results from a well-designed turnaround process should always be encouraging, as the plan ensures all the affected areas are taken care of. After twelve months of using the new means of operation, the firm reduced the breakeven point by a margin of over 40%. The cost of administering the firm also dropped by 30% as the direct labor is also reduced. Generally, the business grew up with a margin of 10% from the previous year after covering up all the losses made in the previous business period.
Finkin, Eugene F. “Company turnaround.” Journal of Business Strategy (1985): 46-67
Harker, Michael, and Bishnu Sharma. “Leadership and the company turnaround process.” Leadership & Organization Development Journal (2000): 234
Slone, Reuben E. “Leading a supply chain turnaround.” Harvard Business Review 82.10 (2004): 114-212.
Zimmerman, Frederick M. “Managing a successful turnaround.” Long Range Planning 22.3 (1989): 105-124.