Turnaround strategy can be defined as an corporate action that is taken to deal with issues of a loss-making company.

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Corporate Turnaround Strategy
Everyone must have heard of Apple story of turning it around from its bankruptcy. In
1990’s Apple Inc. was on the brink of bankruptcy. That was the time when Steve Jobs (Co-
founder of Apple) returned to took over the company second time. The strategic steps of
Steve Jobs, such as developing iPod and iPad, made Apple one of the most successful
Fortune 500 companies. This had likely become the industry’s biggest comeback story yet.
The turnaround phase for any company is a very critical situation any company goes
through. Let’s have a look at this turnaround concept in brief.
What is Corporate Turnaround?
There are times when once highly stable, profitable and competitive entities all of a sudden
struggle to improve its financial and operational performance. That is when Turnaround
occurs. Itoccurs when a company takes successful steps to correct a period of deteriorating
financial performance.
Turnaround Strategy can be defines as an corporate action that is taken (performed) to deal
with issues of a loss-making company like increasing losses, lower return on capital employed,
and continuous decrease in the value of its shares.”
A condition of brink of bankruptcy occurs when a company drops in various complex
situations. Lenders want a return of their invested capital, preferably with interest.
Creditors want their money in exchange for goods and services. Original investors want
and hope for recovery of their capital. Owners want to avoid guarantees and recover some
of their equity. Employees want their jobs and benefits. Directors want to avoid risk and
litigation. Other stakeholders want their interests protected. To overcome these
complicated situations corporate turnaround is necessary.
There is a process of recovery and investment. This process comprises of different stages
which are as follows:
1. Changing Management
Steps are taken to weed out or replace any top managers who might impede the
turnaround effort. This may include the CEO, CFO, or weak board members.
2. Analyzing the Situation
Before a turnaround specialist makes any major changes, a company must determine the
chances of the business’s survival, identify appropriate strategies, and develop a
preliminary action plan. Here a company needs to analyze its sales & marketing strategies,
cash-flow, profitability and ways to improve their product or services.
3. Implementing an Emergency Action Plan
Emergency steps are performed to stop the bleeding and enable the organization to
survive. Cash is the lifeblood of the business. A positive operating cash flow must be

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established as quickly as possible. In addition, a sufficient amount of cash to implement the
turnaround strategies must be sourced.
4. Restructuring the Business
Now turnaround efforts are directed toward making the remaining business operations
effective and efficient. The company must be restructured to increase profitability and its
return on assets and equity.
5. Return to Normal
In the final step of a turnaround, a company slowly returns to profitability. While earlier
steps concentrated on correcting problems, the final stage focuses on institutionalizing an
emphasis on profitability and return on equity, and enhancing economic value-added. It
means a rebirth of the corporate culture and transforming negative attitudes to positive,
confident ones as the company maps out its future.
There are many big global companies who have gone through the condition where they
were on the verge of bankruptcy but have managed to turnaround themselves by
implementing some effective strategies. The strategies adopted by them are mentioned
below:
GM Motors
Founded in 1908, GM dominated the car industry through the early 1950s. In 2007, the
once-vibrant American carmaker was reporting week sales, and with the Great Recession
kicking into full gear, the company's future looked grim. In June 2009, General Motors filed
for bankruptcy in the Manhattan New York Federal Bankruptcy court. It was the fourth
largest bankruptcy case in the U.S. history following Lehman Brothers Holdings Inc.,
Washington Mutual and WorldCom Inc. In its bankruptcy filing for its U.S. and Canadian
operations only, GM listed $82.3 billion in assets and $172.8 billion in liabilities.
Ed Whitacre retired as CEO of AT&T in 2007, but GM lured him back into the workforce.
The company relied on him to turn things around after its bankruptcy and government
bailout. He tossed out much of the company's underperforming baggage. The company
trimmed stalling brands such as Hummer, Pontiac, Saturn, and Saab from its lineup. He
streamlined the company's holdings, selling Saab and cancelling projects such as another
model of the Chevrolet Volt that was planned to compete with the Toyota Prius, and earned
the nickname of ‘GM's Reaper’. It also discontinued its electric-powered Chevy Volt.
NGMCO Inc. purchased the desirable assets of old GM and formed the new GM via the
bankruptcy process and was renamed General Motors Company. The purchase was
supported by $50 billion in U.S. Treasury loans, giving the U.S. government a 60.8% stake
to help keep them up and running during its reorganization. The new GM revolves around
four brands, Chevrolet, Cadillac, GMC and Buick, as well as a few of its overseas operations.
Sixteen months later, GM launched the biggest IPO in history at $23.1 billion. Eventually,
GM reemerged from bankruptcy in 2009.

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Walt Disney Bounced back Story
The cartoon animation pioneer The Walt Disney Co. (Now Disney Corp.) weathered several
major financial setbacks in the late 1920s and 1930s.
In the year 1920 Disney formed his first animation company Laugh-O-Gram Studio in
Kansas, with the intention of making animated fairy tales. Laugh-O-Gram found a financial
backer in New York, and Disney began building up his staff of animators. However, the
backing firm went broke, and Disney was no longer able to pay his employees or his debts.
The company filed bankruptcy and lost Laugh-O-Gram Studios. He also loses rights to the
popular cartoon character Oswald-the Lucky Rabbit.
Oswald was a mute cartoon character. For Oswald cartoon series Walt Disney was working
with distributors called Universal & Winkler pictures. At contract renewal time in 1928,
Charles (owner of Winkler) offered him the deal with a pay cut which Walt denied to
accept. He took away company’s animators as well as successful character Oswald at that
time. The studio had become burdened with debt, and Disney was forced to declare
bankruptcy. The company was $4 million in debt.
In 1923 Disney formed a new company with a loan from his parents. In 1928, Disney
Brothers along with UbIwerks (animator) animated a new cartoon character Mickey
Mouse. The company added a revolution in the character by making Mickey to talk. Walt
envisioned a cartoon in which music, sound effects and dialogue worked in sync with
moving pictures to produce a powerful visual and sound effect on the audience. With Walt
as the voice of Mickey, the cartoon was an instant sensation. Eventually, the creative film
premiered on November 18, 1928 and after the first showing, the audience gave Mickey
Mouse a standing ovation. Walt was at the top of the cartoon industry and more money was
pouring into his company than he had ever seen before.
Walt also released "Snow White and the Seven Dwarfs" in 1938. The blockbuster movie
sprung the company out of bankruptcy and bankrolled the building of a new Walt Disney
Studios in Burbank, Calif.
But unlike these stories, every corporate turnaround cannot be successful.
Turnaround efforts can be risky and don't always end in success. According to a Harvard
Business Review study, about 70% of all turnaround efforts fail. However, some companies
with their critical plans and strategies have emerged from bankruptcy. To connect with
best professional who can guide you best for your company’s turnaround strategy you visit
Crossprof.com, a place where business service solutions are provided in a comprehensive
way.
Ref:
http://fortune.com/2013/02/07/5-tech-turnarounds-that-actually-worked/
http://www.turnaround.org/Assistance/IndustryRenewal.aspx
http://www.entrepreneur.com/slideshow/219445

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http://www.inc.com/tim-gray/the-best-comeback-stories-ever-told.html
http://www.biography.com/people/walt-disney-9275533
http://bankruptcy.uslegal.com/profilesfamousbankruptcies/walt-disney/
http://bankruptcy.uslegal.com/profilesfamousbankruptcies/general-motors/