TURN AROUND- DIVESTMENT AND LIQUIDATION STRATEGIES.

Submitted to, Mr. R.R. Srivastava

Submitted by, Akhil Ravi IV th Sem PIMS

TURN AROUND
Meaning It is a type of strategy specifically developed by the management to improve operational efficiency and productivity with a view to increase overall profitability of business. Definition According to Dictionary of Marketing Turnaround means making the company profitable again.

FEATURES OF TURNAROUND
Objective:- improve the performance of the unit by rearranging the available resources. Long Term Strategy :-. It studies the problem indepth and tries to solve it forever. Scope of Turnaround:- It is effective in case of loss making units but having growth or future prospects. Requires Cooperative effort Involves restructuring Permanent effect Optimum utilization of resources

LIQUIDATION
Meaning Liquidation is the final decision or withdrawal of commercial activities of the firm forever. Liquidation of a company is the permanent closing down of the business of a company. Definition According to Prof Gower winding up of a company is a process whereby its life is ended and its property administered for the benefit of its creditors and members.

REASONS FOR LIQUIDATION OF A BUSINESS FIRM

Lack of Proper Inventory Control Weak Competitive Position Low Sale Values Disaster

EFFECT OF LIQUIDATION

Liquidation affects shareholder, employees, consumers, government and society at large. The immediate effect of closure is one employees who lose their jobs, salary and other benefits. Shareholders fund get blocked without appreciation in value.

DIVESTMENT
Meaning This strategy involves dropping some of the products, markets or functions. The dropping of activities or businesses can be attained under through sale or liquidation. Selling a division or part of an organization is called divestment.

REASONS FOR DIVESTMENT

Outdated products, which no longer brings good returns to the firm High competition in the market Negative cash flows Technological up gradation is required for survival of the business A firm may find it difficult to manage growing business, and therefore it may divest non-core business to concentrate on core business A firm may find a better alternative to invest.

APPROACHES TO DIVESTMENT
Firm may choose to divest in two ways. 1. A particular business can be divested into a separate independent company and the parent company may or may not retain partial ownership. 2. A particular business may be sold outright to another firm.

THANKS.