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PA OPINION

Restructuring and turnaround

Economic cycles are getting shorter and competitive pressures are rising in manufacturing. Managing sustainability and profitable growth in order to lead the competitive agenda becomes even more of a challenge for most companies.

Reshaping for recovery is on corporates' agenda - be a winner, not just a survivor. The key objective, particularly in uncertain recovery, is securing the right balance between operational and strategic development, between short-term pressures and long-term objectives, but additionally prepare for the upturn.

The key to success is achieving the correct mix of

  • securing liquidity

  • focusing the business portfolio

  • raising and sustaining performance.

These key aspects of business management are very often carried out labelled as restructuring, driving better results under high pressure. Handling these requires a committed senior team, a good mix of insiders of the specific company, an excellent financial business case, efficient communication to all relevant stakeholders as well as a sound quick scan analysis for root causes. The first step into subsequent implementation of a turnaround is usually to ‘stop the bleeding’ - until this has been achieved every day of business can be costly.

Driving results through all steps of a restructuring programme will be the only way to re-establish trust with all key stakeholders (customers, suppliers, shareholders, bankers, key managers, key experts) and to ensure the future of the company. PA Consulting Group is awarded for successfully implementing this approach with its client Inalfa Roof Systems.

Manufacturing companies held crisis meetings in 2009 with the two critical agenda items cost reduction and achieving cash position improvements. As the crisis took hold, making fundamental adjustments to capacity became the highest priority, given the unpredictable markets. There is continuous need for improving operational performance and competitiveness by efficient use of working capital.

To thrive in the crisis, the main challenge is to carry out targeted restructuring in the medium term. However, decisions affecting the long term must be taken now to put companies on course with a solid, future-oriented strategy. It is crucial that organisations prepare for economic recovery, in order to be able to create value for customers with innovative products.

To find out more about emerging as a winner, please contact us now for receiving a webinar presentation or white papers on restructuring strategy for business optimisation and value management.