how to affect a turnaround
turnarounds are important because they mark an upward shift or improvement for an entity after it experiences a significant period of negativity the turnaround is akin to a restructuring process where the entity converts the period of loss into one of profitability and success while stabilizing its future in investing the term can mean the amount of elapsed time between the placing and fulfilling of an order turnarounds may happen on many levels from the individual to a country s economy or even be a global event the term indicates a phase when an entity begins to experience steady and positive financial or performance recovery after a time of decline in most cases the first step in moving into a turnaround phase is to acknowledge the problems creating a downturn in the case of a business they may examine changes in management or problem identification and solving strategies in dire situations the best action may be to liquidate the company special considerationsthere are specific features that will usually identify an entity in need of a turnaround for a business these may include declines in the price of its stock the need to layoff employees and revenues that do not cover requirements to pay creditors changes in a firm s competitive advantage and outdated products or service may also be indicative of a business that needs to investigate turnaround strategies also bad management of resources such as labor and capital may put pressure on the company a stock speculator may profit from a turnaround if they accurately anticipate the improvement of a poorly performing company seldom do turnarounds happen in isolation but instead are the result of internal and external forces internally more attention may be paid to the problems in processes spending management and other factors that created a situation of decline externally the business may find new regulations that have provided them with a lower cost of production materials that can lead to higher profits a turnaround management team will review the primary causes of the company s failure and devise a strategic plan that may include restructuring or repositioning the business example of a turnaroundthe u s economy experienced a recession in 2009 after the subprime mortgage crisis led to the collapse of the u s housing bubble the crisis led to the collapse of some of the country s and the world s biggest banks the economy began experiencing a turnaround about a year later after the federal government responded with a series of bailouts and a stimulus package declining sales leading up to the financial crisis followed by a tightened lending environment for auto sales were two factors that significantly slowed revenue and earnings for u s automakers in the late 2000s the auto industry suffered troubled times in 2009 general motors gm declared bankruptcy as a result of the crisis and its stock was delisted from trading 1 bailout funds and its bankruptcy helped the company restore its manufacturing production and sales in 2010 after a complete reorganization gm s stock began trading again with increased production and sales 2 