2. What is Turnaround Strategy ?
• Turnaround strategy means to convert, change or transform a
loss-making company into a profit making company.
• It helps the sick company to stand once again in the market.
• It tries to reverse the position from declining sales to
increasing sales, from weakness to strength, and from an
instability to stability.
4. Managing turnaround strategies
• Joining internal turnaround team with external
specialist.
• Consulting with external turnaround specialist.
• Removing the top management and merging with
healthy organization.
8. Problem Faced by Lou Gerstner
Problem in Approach
1. Lack of sophisticated marketing techniques and PR policies
2. Disconnect between research market
3. Strained relationship with customer
Management Problems
1. High beaurocracy
2. Executive – Customer disconnect
4. Low emphasis on marketing
Costs
1. High overhead costs
2. More employees than needed
9. Steps taken by Lou Gerstner
Cost Reduction
1. Sold of some non core business
2. Focus on not breaking up the company
3. Reducing expenses by 9%
Remaking the Brand
1. O&M’s global advertising campaign: solution for a small planet
2. Product rationalization and focus on Brands
Change Management
1. Executive that rested the global approach were fired
Organizational Changes
1. Reorganized into global organization – CEC & WMC
2. Attention to sales organization
3. Reduction in board size
4. To reduce bid preparation time: Sales team split into 2– the
Product Specialists and CRMs
10. Impact of the Strategies
• Standardization in product and processes
• Global positioning
• No. 1 company for leaders (Fortune)
• No. 1 green company in the U.S. (Newsweek)
• No. 2 best global brand (Interbrand)
• No. 18 most innovative company (Fast company)
• IBM's brand was valued by Interbrand at $75.5 billion in 2012