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Follow on Google News | Corporate Failure Survey Results Published by the Turnaround Management SocietyDr. Christoph Lymbersky Executive Director of the Turnaround Management Society (TMS) asked 405 turnaround managers and restructuring experts about what factors lead to corporate crises.
By: Turnaround Management Society The complete survey results will be published in the 1st issue of the Turnaround Management Journal in 2014 and on the Turnaround Management Society (http://www.turnaround- According to the 2014 "Why do Companies Fail" survey almost 88 percent of respondents held top management responsible for a crisis situation, and 30.3% blamed middle management. The most commonly cited reason was corporate strategy (45.5%) followed by internal communications (30.2%), marketing (24.3%), sales (24.2%), and customer service (15.2%). The survey highlights 5 prominent problem areas: 1. Internal Communication In almost a third of all situations, insufficient internal communication played a big part in fostering the crisis. Often the management does not communicate much once a crisis becomes obvious, or the communication is not clear enough. According to the survey a common mistake seems to be that the management plays down the severity of the crisis, or even communicates that everything is okay, while working on job cuts and salary reductions in the background. 2. The Educational Background of the Management A third (30.3%) of all turnaround consultants found that the management of the company was not very well educated in business matters. The Turnaround Management Society (http://www.turnaround- 3. The Company's Product/Market Mix Expansion of an existing product line is not always a success and can lead to a corporate crisis (21.2%). In other cases, investment into future products and technologies was, over the years, not enough (18.2%), leading to missed technological advances to reduce production costs, a lack of features, or new technologies that competitors can provide. 4. Corporate Finance Quite high up on the list of causes of crises in the questionnaire were liquidity and cash flow problems (27.63%), which are often caused by insufficient controlling and accounting processes (21.2%) and no or inappropriate financial planning (15.2%). 5. Human Resources No goals or wrong goals for the workforce (15.1%) often contribute to poor performance by employees and accelerate a crisis situation. Setting no goals is as ineffective as too many goals. An employee can only spend so much time on something they are supposed to focus on. If too many goals are set some of them will suffer, or the quality of the work will decrease. The Turnaround Management Society (http://www.turnaround- To overcome the problems of why companies and turnaround projects fail Dr. Christoph Lymbersky of the Turnaround Management Society has developed the "International Turnaround Management Standard". It is a project management based method of leading a company to a sustainable turnaround. The International Turnaround Management Standard includes financial restructuring techniques, strategic & operational strategies, marketing aspects, crisis communication with stakeholders (to maximize the internal support and minimize bad press), controlling, quality control processes, risk management, etc. To read the full crisis causes survey please visit the Turnaround Management Society (http://www.turnaround- End
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