(b) "There are certain conditions or indicators which point out that a turnaround is needed if the company has to survive". Discuss.

(b) Rising competition, business cycles and economic volatility have created a climate where no business can take viability for granted. Turnaround strategy is a highly targeted effort to return an organization to profitability and increase positive cash flow to a sufficient level. Organizations that have faced a significant crisis that has negatively affected operations require turnaround strategy. Turnaround strategy is used when both threats and weaknesses adversely affect the health of an organization so much that its basic survival is a question. When organization is facing both internal and external pressures making things difficult, then it has to find something which is entirely new, innovative and different. Being organization's first objective is to survive and then grow in the market; turnaround strategy is used when organization's survival is under threat. Once turnaround is successful the organization may focus on growth. Conditions for turnaround strategies: When firms are losing their grips over market, profits are due to several internal and external factors, and if they have to survive in the competitive environment, they have to identify danger signals as early as possible and undertake rectification steps immediately. These are certain conditions or indicators which point out that a turnaround is needed if the company has to survive. These danger signals are: Persistent negative cash flow from business. Uncompetitive products or services. Declining market share. Deterioration in physical facilities. Over-staffing, high turnover of employees, and low morale. Mismanagement.