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Author - Bhawani Nandan Prasad ( Executive Senior Management MBA Indian Institute of Management,
Calcutta and MBA E-Busine...
changes in the external environment it may be useless to expect that cost cutting alone can lead to
renewed growth.
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7 levers of senior management strategy


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7 levers of senior management strategy by Bhawani Nandan Prasad

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7 levers of senior management strategy

  1. 1. Author - Bhawani Nandan Prasad ( Executive Senior Management MBA Indian Institute of Management, Calcutta and MBA E-Business Marketing Entrepreneurial ship from Stratford University USA ) An organization requires a lot of changes while changing their core management strategy. There are some fundamental changes an organization needs to bring (like cultural and transformational) whereas there are some other crucial levers which, if pulled, can lead to positive and effective strategic change. The effectiveness would depend upon the level of implementation, prioritization and speed at which these levers are pulled. The following describes those seven levers – 1. CRISIS STABILISATION – the first and foremost is around how to get hold of the bad/deteriorating situation of the company. There should be actions around increasing revenue and reducing cost at immediate basis. Some of them are defined below – Increasing revenue • Ensure marketing mix tailored to key market segments • Review pricing strategy to maximize revenue • Focus organizational activities on needs of target market sector customers • Exploit additional opportunities for revenue creation related to target market • Invest funds from reduction of costs in new growth areas Reducing Costs • Reduce labor costs and reduce costs of senior management • Focus on productivity improvement • Reduce marketing costs not focused on target market • Tighten financial controls • Tighten control on cash expenses • Establish competitive bidding for suppliers; defer creditor payments; speed up debtor payments • Reduce inventory • Eliminate non profitable products/services. These are basic management practices however as mentioned above, the speed at which they need to be executed in deteriorating situation of the company, makes whole lot of a difference. The most successful turnaround strategies focus more on reducing direct operational costs and on productivity gains, whereas less effective approaches pay more attention to the reduction of overheads. Most of the time, these turnaround can be viewed as cost cutting exercises when a wider alignment between causes of decline and solutions is an important consideration. If the decline is because of
  2. 2. changes in the external environment it may be useless to expect that cost cutting alone can lead to renewed growth. 2. MANAGEMENT CHANGES – Changes in management are usually required, especially at the top level. This usually includes the introduction of a new chairman or chief executive, as well as changes in the board, especially in marketing, sales and finance, for three main reasons. First because the old management may well be the ones what were in charge when the problems developed and be seen as the cause of them by key stakeholders. Second because it may be necessary to bring in management with experience. One more reasons is because the new management will bring new ideas to turn around things. 3. GAINING STAKEHOLDER SUPPORT – One must, at these times, keep the key stakeholders informed. We generally see that organizations start hiding/concealing things when they are in bad time which leads to further deterioration of trust. Banks, lenders, financial institutions and shareholders – all require the information and by communication the required information to them, the organization can gain their support. 4. CLARIFYING THE TARGET MARKETS – for any successful turnaround, the company/management has to ensure that they target the markets where they are expecting growth/revenue. There are lessons to learn from initial mistakes and if the investments made earlier to focus on a particular market were wrong, it would be only right for the company to leverage its limited resources in the right markets. By doing this, they can focus on their key customer base and gain their trust and loyalty. 5. RE-FOCUSING – the abovementioned step would help in putting the focus only on those products and services which hold value to the company. Those which are not yielding revenue and growth would need to be discontinued and those services which can be outsourced, should be outsourced. 6. FINANCIAL RESTRUCTURING – the organization would also need the overall structure to be reevaluated. This might require changing the financial allocation, capital structure and raising some more funds so that the same can be aligned to new target markets. 7. PRIORITISATION OF CRITICAL IMPROVEMENT AREAS – with so many levers, prioritization becomes the key. Correct prioritization would let the company see quick turnarounds. This last but not the least lever, most of the times, is considered to be critical in any management change and defines success or failure.