Turnaround Management, CSR

TURNAROUND
MANAGEMENT AND CSR,

By: Prof. Teena Bharti
Turnaround Management-Introduction
◦ Everything needs fixing. Nothing is sure except the need to recover.
◦ Turnaround Management gained prominence when there were incidences of the corporate
declines at global scale that caused organization failure.
◦ Turnaround management is the procedure of evaluating an underperforming business to
determine the cause of its problems.
◦ Turnaround management is a process dedicated to corporate renewal. It uses analysis
and planning to save troubled companies and returns them to solvency, and to identify
the reasons for failing performance in the market, and rectify them.
◦ A corporate turnaround may be defined simply as the recovery of a firm’s economic
performance following an existence-threatening decline (Pandit 2000, Walshe
2004).
Turnaround management involves:-
◦ – management review
◦ – root failure causes analysis
◦ – SWOT analysis to determine why the company is failing.
◦ Once analysis is completed, a long term strategic plan and restructuring plan
are created.
◦ Note: Often, this strategy is employed when the business is under financial stress. However, it is not
necessary to wait till the situation becomes too complicated to commence the turnaround Management
strategy.
Why do business fails
Businesses fail because of mismanagement. Sometimes it is denial, sometimes negligence, but it
always results in loss. Mismanagement is most often seen in more than one of multiple areas:
o Autocratic Management, Overextension
o Ineffective, Non-existent Communications
o High Turnover Neglect of Human Resources
o Inefficient Compensation & Incentive Programs
o Company Goals Not Achieved or Understood
o Deteriorating Business, No New Customers
o Inadequate Analysis of Markets & Strategies
o Lack of Timely, Accurate Financial Information
o History of Failed Expansion Plans
o Uncontrolled or Mismanaged Growth
Stages of Turnaround Management Situation
Management (Collard Change Stage
[Leadership]
Analysis Stage
[Viability]
Emergency Business
Action Stage Restructuring
[Crisis Control] Stage [Change]
Return to
Normal Stage
[Going
Concern]
Contd…
Repositioning- The repositioning strategy, also known
Techniques of Turnaround as "entrepreneurial strategy", attempts to generate

revenue with new innovations and change in product
Management portfolio and market position. This includes
development of new products, entering new markets,
exploring alternative sources of revenue and
modifying the image or the mission of a company.
Retrenchment -The Retrenchment strategy of the Replacement -Replacement is a strategy, where top
turnaround management describes wide-ranging short- managers or the Chief Executive Officer (CEO) are
term actions, to reduce financial losses, to stabilize the replaced by new ones. This turnaround strategy is
company and to work against the problems, that caused used, because it is theorized that new managers bring
the poor performance. To reduce scope and the size of a recovery and a strategic change, as a result of their
business through Shrinking Selective Strategy. different experience and backgrounds from their
◦ – Selling assets previous work.
◦ – Abandoning difficult markets Renewal- With a Renewal a company pursues long-
term actions, which are supposed to end in a
◦ – Stopping unprofitable production lines
successful managerial performance. The first step here
◦ – Downsizing is to analyze the existing structures within the
◦ – Outsourcing. organization. This examination may end with a closure
of some divisions, a development of new markets/
projects or an expansion in other business areas.
Hurdles/Challenges of Turnaround
Management
◦ – Design: What type of restructuring is appropriate for dealing with the
specific challenge, problem, or opportunity that the company faces?
◦ – Execution: How should the restructuring process be managed and the many
barriers to restructuring overcome so that as much value is created as possible?
◦ – Marketing: How should the restructuring be explained and portrayed to
investors so that value created inside the company is fully credited to its stock
price?
CSR-Corporate Social Responsibility
◦ Corporate Social Responsibility is a management concept whereby companies integrate social and environmental
concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being
the way through which a company achieves a balance of economic, environmental and social imperatives (“Triple-
Bottom-Line- Approach”), while at the same time addressing the expectations of shareholders and stakeholders
(UNIDO).
◦ Enactment of Companies Act, 2013 by the Ministry of Corporate Affairs, Government of India was one of the world's
largest experiments of introducing the CSR as a mandatory provision by imposing statutory obligation on Companies to
take up CSR projects towards social welfare activities. This has made India the only country which has regulated and
mandated CSR for some select categories of companies registered under the Act. This CSR Initiative will push the nation
towards achievement of sustainable development goals and public-private partnership in transforming India.
◦ Key CSR issues: environmental management, eco-efficiency, responsible sourcing, stakeholder engagement, labour
standards and working conditions, employee and community relations, social equity, gender balance, human rights, good
governance, and anti-corruption measures.
Different Names of CSR
What is CSR?
• Corporate social responsibility (CSR) is a self-regulating
business model that helps a company be socially ◦ The CSR provision requires affected companies to spend at
accountable—to itself, its stakeholders, and the least 2 percent of their average net profits made in the
public. By practicing corporate social responsibility, also preceding three years on CSR. Companies must set up a
called corporate citizenship, companies can be conscious “CSR Committee,” including at least one independent
of the kind of impact they are having on all aspects of director who will be appointed to the company's board.
society, including economic, social, and environmental.
• The idea of CSR first came up in 1953 when it became ◦ COVID-19 SCENARIO- Amid the COVID-19
an academic topic in Howard R Bowen’s “Social (coronavirus) outbreak, the Ministry of Corporate Affairs
Responsibilities of the Business” book. World Business has notified that companies’ expenditure to fight the
Council for Sustainable Development defined CSR as pandemic will be considered valid under CSR activities.
“the continuing commitment by business to behave Funds may be spent on various activities related to
ethically and contribute to economic development while COVID-19 such as promotion of healthcare including
improving the quality of life of the workforce and their preventive healthcare and sanitation, and disaster
families as well as of the local community and society at management.
large.
Four Broad areas of CSR
Examples of CSR initiatives
◦ Levi Strauss - Workers Well Being (Levi Strauss is a company dedicated to change this by focusing on empowering
workers financial, health, and family well-being.
◦ And that’s the premise of the Workers Well Being initiative launched by the company in 2011)
◦ Starbucks – C.A.F.E. Practices

◦ The acronym for Starbuck’s CSR initiative stands for Coffee and Farmer Equity (C.A.F.E.)
◦ All coffee purchased by the company meets their standards of quality,
◦ It must be sustainably grown.
◦ Support the farmers. The company requires **suppliers to submit evidence of payments made throughout the coffee supply
chain to demonstrate how much of the price Starbucks pays for green (unroasted) coffee gets to the farmer.
◦ Ensures safe, fair and humane working conditions for workers and providing adequate living conditions.
◦ Tata Group
◦ The Tata Group conglomerate in India carries out various CSR projects, most of which are community improvement and
poverty alleviation programs.
Types of CSR
◦ According to Geoffrey Lantos:3 main types of CSR.
◦ Ethical CSR: It’s about the responsibility to avoid harms or social injuries.
◦ Altruistic CSR: Contributing to the common good at the possible expenses of the
business for altruistic, humanitarian or philanthropic causes.
◦ Strategic CSR: It’s about firm’s social welfare responsibilities that benefit both
the corporation and stakeholders.
BENEFITS OF CSR
◦ The potential benefits of CSR to companies include:
◦ better brand recognition
◦ positive business reputation
◦ increased sales and customer loyalty
◦ operational costs savings
◦ better financial performance
◦ greater ability to attract talent and retain staff
◦ organizational growth
◦ easier access to capital
ENGAGING THE
EMPLOYEES
THROUGH CSR
Conclusion
◦ CSR is the heart and soul of modern corporations and is an important standard
for corporate governance. CSR is an indispensable mechanism for both
increased corporate accountability, profitability and environmental
sustainability. CSR is the pole star for modern corporations in order to
maintain the integrity of moral fabrics both inside and outside the corporation
while conducting socially responsible business.
Thank You

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TURNAROUND

MANAGEMENT AND CSR,

Techniques of Turnaround as "entrepreneurial strategy", attempts to generate

◦ Starbucks – C.A.F.E. Practices

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