Scientific Papers Series Management, Economic Engineering in Agriculture and Rural Development

Vol.12, Issue 2, 2012

ISSN 1844-5640

LEADERSHIP AND TURNAROUND MANAGEMENT CONCEPTS

APPLIED IN THE AGRIBUSINESS ENVIRONMENT IN ROMANIA
Ana-Maria-Loredana PREDA1
1

Mediterranean Agronomic Institute of Chania

Alsyllio Agrokepiou, Chania, Crete, Greece, Phone: +302821035000
Fax: +30 28210 35001 E-mail: lori_ekp@yahoo.com
Corresponding author: lori_ekp@yahoo.com
Abstract
Most of the times Romanian businessmen operating in agriculture make wrong use of the terms leadership and
management, going further, most of them do not differentiate very well when considering the types of
management they actually use. The main objective is to point out the current status in the field and establish
appropriate boundaries, as well as to draw attention over the benefits that leadership and turnaround management
may bring about for both the business environment for the near future through the development of an explorative
study based on a complex survey. Results have shown that the Romanian agribusiness environment is going through
serious changes and is trying to apply concepts that are relatively new for it so that it may catch up with the trends
in the region and EU overall as respect to running businesses during financial crisis times.
Keywords: leadership, turnaround management, agribusiness, financial crisis

INTRODUCTION
Leadership is a very rich word. It represents
how a single person can motivate a group of
people to act towards achieving a common
goal. In business either we are referring to
cars, clothes, furniture, constructions,
agriculture, etc. leadership is linked directly
to performance. Effective leaders are those
who increase the profitability of the business
they run.
Turnaround management is a tough practice
and it depends mostly on the leadership skills
of the manager and the available
organizational framework in order to engage
in attaining achievements and being effective.
In agriculture, agribusiness is a broad
expression for the a range of businesses
involved in food production, farming, seed
supply, agrichemicals, farm machinery,
wholesale and distribution, processing,
marketing, and retail sales.
Within the agriculture industry, agribusiness
is extensively used merely as a suitable link of
agriculture and business, referring to the range

of activities and disciplines included by

modern food production.
MATERIAL AND METHOD
The research is structured in two major parts
literature review and the applicative
questionnaire
research.
The
research
considered 220 businesses from the
agribusiness environment in Romania to
which questionnaires applied in order to
evaluate the extent to which their
leaders/managers/administrators possess the
know-how needed to face the current
economic turmoil. The survey sample is
considered to be representative for the
population targeted. Respondents were asked
to answer a number of questions revealing
their personal knowledge, their operating style
and their willingness to stay up to date with
the progress in their field of work.
The questionnaire included both opened and
closed questions, multiple choice questions
and eliminatory questions and included four
sections: general data, knowledge evaluation
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Scientific Papers Series Management, Economic Engineering in Agriculture and Rural Development
Vol.12, Issue 2, 2012
ISSN 1844-5640

on the research topics, evaluation section on

the type of leaders they are and an evaluation
section on the willingness to stay up to date
with the progress in the specific field of work.
Each questionnaire was then filled out by a
decision maker respondent within an
agribusiness profile company/association/
NGO.
The hypothesis proposed for testing were the
following:
1. Romanian agribusiness top management
includes more managers than leaders;
2. most people in Romanian agribusiness tend
not to know what turnaround management is;
3. less than 50% Romanian agribusiness
managers have the have specialized studies;
4. less than 25% Romanian agribusiness
managers are interested in staying up to date;
5. the EU, the Romanian Government, NGOs
are offering specialized support to run
agribusinesses in harsh times of financial
crisis;
6. Romanian agribusiness is progressing
with small steps.
The materials used in performing the
theoretical part of this research is represented
by specialized literature books, articles,
handbooks, legislative frameworks, etc..
Beside these resources databases that contain
official census information were accessed. For
the data processing and analysis JMP
Statistics, First Bayes, GGUM 2004, and Ms
Office 2010 Excel were used for the
quantitative and qualitative statistical analysis.
For the questionnaire design Ms Office 2010
Word was used.
RESULTS AND DISCUSSIONS
Over time numerous definitions and theories
have been developed in order establish what
leadership is. The overall resemblances
gathered by all definitions wrap up the
concept through two ideas, namely persuasion

attempt and power to encourage attaining

goals [7].
There were a lot of studies performed by
scholars in the past few decades whose sole
purpose was to capture the core of leadership
[1].
The meaning of leadership is complex and
includes many dimensions. For some people,
leadership is a trait or ability, for others it is a
skill or behaviour, and for others it is a
relationship or process.
In the 1980s leadership researchers
determined that leadership is simply doing
the right thing to achieve excellence.
Management, as a practical, everyday activity,
originated as far back as man in his huntergatherer phase, organizing effective ways of
achieving collective goals in a highly
coordinated manner.
About turnaround management, scholar
Stanley Goodman stated: A turnaround is to
produce a noticeable and endurable
improvement in performance, to turnaround
the trend of results from down to up, from not
good enough to clearly better, from
underachieving to acceptable, to losing to
winning [3].
Turnaround management process aims at
acknowledging that the business is distressed
or operating below expectations. This in turn
may result in loss of prestige, goodwill and
credit lines. Clients and staff may tend to find
other options if formal signals of distress
become public. So it is preferable to apply
turnaround management on an earlier-stage,
for a higher flexibility rate and a greater
chance of success.
The turnaround starts with a diagnostic
assessment that is supposed to determine the
actual position of the business from a
strategic,
operational
and
financial
perception. This
assessment
involves
impartial analytical and technical skills
combined with practice. The manner in
which the assessment is undertaken is
important as it impacts the quality of
information acquired and the chances for a
successful turnaround. The relation with the

Scientific Papers Series Management, Economic Engineering in Agriculture and Rural Development
Vol.12, Issue 2, 2012
ISSN 1844-5640

employees is vital and through good

communication a broad picture of the
business is attained. Especially in times of
crisis employees show fear and this is one of
the elements that have to be counteracted. The
turnaround manager must ensure trust and a
truthful and accurate flow of information. A
blend of solid influence skills that can only
come with experience in steering the ship is
required as the relationship between all
concerned becomes dominant.
One of the most important functional areas in
a turnaround is differentiating between critical
from non-critical processes so that the
decisions taken use best the scarce resources,
often representing the difference between
success and liquidation.
In simplifying structures the turnaround
management undertakes a commitment to
change. Following through on responsibility
and performance the turnaround plan is
thought out to be successful. Communication
during change is imperative and the risk of
having misunderstandings has to be
prevented.
In troubled circumstances, rescheduling or
reorganization of debt and attraction of new
capital is involved. The turnaround
professional, negotiator and visionary, must
show not only exceptional analytical and
technical skills, but the ability to negotiate
sustainable agreements. Change is not
supposed to be seen as an ending point. This
has to be a cyclic element made durable by
the turnaround manager through a clear
understanding
of
direction
involving
employee engagement and communication,
measurable deliverables, taking into account
any financial constraints, pressure on working
capital, and difficult financial-economic and
political times. A steady environment allows
for mistakes and longer cycles to achieve
goals. Distressed businesses show two main
goals, that to survive and to improve.
Following this analytic phase, the transition
can begin towards a successful turnaround.
Businesses often get into distress because
management postpones when it comes to
making decisions. If the decision is made by

evasion, it is similar to making no decision at

all. Survival also depends upon being abrupt
in making opportune decisions. Making a
wrong decision means drive and direction. If a
decision turns out to be wrong, this can be
changed, adapted on the way.
Time is also a central aspect when it comes to
authority. In a stable business, there is time to
delegate and encourage growth of the
management; there is time to work on longterm concerns and projects. In the distressed
condition assigning takes on a different title.
Managers by nature of their position are held
accountable not only for performance, but for
timely results, and as main decision-makers
they are directly involved.
In a stable situation there is time to develop
ability. But at a distressed business, one must
exploit the abilities of those who can perform
and convert the ability that is deficient. It
means building a permanent management
team capable to bring the business back to
health and add value to it.
Turnaround managers and turnaround leaders
are most often managers with reach
professional experience, who have worked
their way up the corporate ladder through hard
work and fair play, and who have created
themselves a solid management reputation.
They have also established a set of talents to
lever problem solving, with minimal
resources, and scarce cash flow management,
negotiating and dealing with bankers,
investors and creditors.
Where stability is important in a steady
environment, uncertainty is the core of a
turnaround situation. The ability to deal with
change at a rapid pace is critical. The existing
leadership is often out of its element as it
enters these periods of distress.
The turnaround specialist, on the other hand,
is a hands-on decision maker who actually
takes control of the business. He is in control
of the businesss purpose. He must know how
to be decisive, know how to segregate the
difficulties and find solutions.
When in crisis there is no time for
preparation. Just as with that patient in
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Scientific Papers Series Management, Economic Engineering in Agriculture and Rural Development
Vol.12, Issue 2, 2012
ISSN 1844-5640

intensive care, the longer a business is on the

critical list, the harder it is to nurse it back to
vigour. To perform rehabilitation, the
turnaround specialist will know how to make
the quick and suitable decisions put a plan
into action and keep a talented team moving
towards a strong and more valuable goal.
We are living in modern times. Business has
to adapt, especially considering that most of
the advancements were designed for it. From
the computer that occupied one whole room to
the modern personal computer; from simple
accounting software to the complex ERP
systems we can only conclude that change is
part of live and business.
But when we thing to turnaround our
business, most people would still think of
technological or financial related measures.
We propose to go to the third dimension of
the business, respectively to the human
resources. Turnaround management is
extreme change management, and what better
way to implement change management than
to change the management before considering
investing in any other measures. We make
this proposal assuming the fact that the
current management of the business has
already applied all possible measures and
performed all conceivable approaches to
eliminate the source of troubles, still without
success. [5]
The early development of turnaround usually
involves a concentration of power that
transforms into discipline and focus.
Nonetheless, after the crisis has been stopped
the most appropriate structure for a fast
growing business is usually decentralized
because it focuses growth where the market
signals.
Successful turnarounds are based on a
competitive management, a healthy economic
cycle, a competitive environment, innovation
and government support. Also, elements that
come to support the turnaround achievement
relate
to
geographic
decentralisation,
centralized functionality and product/service
diversification.
Professionals believe that for the proper
implementation of turnaround management it
4

is vital for the management to be aware of its

position in the industry in which it is
functioning as also its status in the overall
business environment. Also it is considered
that turnaround is best applied when an
outsider intervenes. The process of a
turnaround
requires
a
fundamental
transformation in the way the internal and
external settings are regarded and replied to
by employees and management. Every so
often, it is an outsider who holds the best
position to lead this forced change and
identify: inaccurate assumptions that led to
the business failure, mental barriers to
optimum solutions that caused the financial
needs, counterproductive management styles
and conducts of individuals, interdepartmental
conflicts, real character of employees toward
the company and their enthusiasm to take an
active part in the turnaround process.
In a turnaround situation, major changes need
to be done and implementation of the plans is
essential. Also for the establishment of
effective plans unfiltered information is a
basic requirement.
Agribusiness is a broad concept used to
describe corporate agricultural enterprises
individually and collectively. Agribusinesses
are companies involved in one or more stages
of the production of crops and livestock.
The agribusiness approach is a method of
examining farming problems in a new and
more comprehensive setting. One benefit
from this approach has been the release of
workersfarm manpowerfrom agriculture
for
employment
in
new
nonfarm
occupationsincluding the armed forces
during wars. This has resulted in tremendous
economic growth and development and an
improved standard of living.
One prominent feature of agribusiness is its
continuous pursuit of new technologies. Wellknown examples include the use of satellitebased global positioning systems to closely
manage crop lands and computer systems to
manage various parts of the business. These
technologies boost agricultural efficiency by
reducing wasted resources, saving time, and
improving output.

Scientific Papers Series Management, Economic Engineering in Agriculture and Rural Development
Vol.12, Issue 2, 2012
ISSN 1844-5640

Crop agriculture, in particular, has turned to

such high-tech solutions to develop what is
known as precision or site-specific farming
methods.
These
methods
involve
systematically testing crop fields for
variations in fertility and soil composition.
The data are then stored in a computer, and,
using GPS equipment on the farm machinery,
the on-board computer can then determine
where in the fields to allocate seed and
fertilizer to maximize yield and minimize
waste.
Moreover, research and development projects
are conducted in agribusiness to find new
technologies and to better use existing ones.
Important R&D work includes developing
genetically engineered crops, improving the
pest resistance of crops, using biotechnology
in agriculture, and formulating new
agricultural pharmaceuticals and chemicals.
Despite considerable government and
university backing for agribusiness research,
the majority of this research is funded by the
private sector.
The agribusiness farmer must have a good
education to be successful. Agribusiness
requires knowledge of business, markets,
agronomy, and mechanics as well as farming.
While the demand for traditional agricultural
economics is diminishing, there is a growing
need for the economics and management of
the food sector and the environment.
The demand for agribusiness was induced by
two factors, one direct and one indirect. First,
as more and more value-added activities
moved off the farm, the size of food
processing and agricultural input sectors
increased. In addition, the emergence of
biotechnology and precision farming created
expanded research possibilities in the field.
To become competitive many farms in
Romania need to enlarge. [4] This implies
also that land and labour markets should
function better in order to foster restructuring
of agriculture. This observation can be made
for almost all Candidate Countries. In
addition, measures should be undertaken in
Romania to reduce market transaction costs,
and there is also a need for small-scale

farmers to seek off-farm

supplementing their income.

jobs

for

Future perspectives for agricultural income

have to be seen with respect to opportunities
and risks. [2] Among the opportunities are
land market liberalization that could
contribute to the growth of farm size, with
implications for increased incomes; the EU
funding programs that could facilitate
investments in agriculture and the creation of
non-agricultural income opportunities in rural
areas; macroeconomic stabilization that would
assure new jobs for young people, including
the rural labour force, and reduce over
employment in agriculture. [6] Finally the
increase of agricultural product prices on both
world and domestic markets, which might
also contribute to a higher income level.
CONCLUSIONS
A turnaround plan is a back to basics,
market-responsive approach that is designed
to achieve high impact, short-term results. A
business may only have one chance to regain
credibility with its employees, clients, and
creditors.
For that reason, maximum effort must be
focused on the opportunity.
If the plan succeeds, then many good people
get to keep their jobs and the business remains
feasible.
If the plan is not carefully thought-out and
implemented, the turnaround may fail and
reorganization may be the foreseeable
consequence.
The statistical hypothesis testing performed
has confirmed the following:
- less than 50% of managers in agribusiness
have little or no knowledge on leadership;
- less than 30% of managers in agribusiness
have little or no knowledge on turnaround
management;
- less than 30% of managers in agribusiness
have little knowledge on agribusiness;
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Vol.12, Issue 2, 2012
ISSN 1844-5640

- less than 50% Romanian agribusiness

managers have the have specialized studies;
- less than 25% Romanian agribusiness
managers are interested in staying up to date;
- Romanian agribusiness top management is
run by more managers than leaders;
- there is a direct link between success in
agribusiness and leadership & turnaround
management know-how;
- actualized knowledge is a critical need under
the current economic context
- the EU, the Romanian Government, NGOs
are offering specialized support to run
agribusinesses in harsh times of financial;
- Romanian agribusiness is progressing and a
positive trend in the development of the
Romanian agribusiness has been observed for
the past 3 years;
- the data revealed the need for specialized
know-how in restructuring the agribusiness to
best face the negative effects of the financial
crisis;
- application of the two concepts presented
under the herein represent opportunities for
the development of the Romanian agriculture
and especially to the success of the
agribusiness
industry,
supporting
the
overcoming of the negative effects of the
financial crisis.
The Romanian agribusiness environment is
going through serious changes and is trying to
apply concepts that are relatively new for it
and to catch up with the trends in our region
and EU overall as respect to running
businesses during financial crisis times.
The material presented in this article offers a
brief view of the research thesis developed by
the author in order to finalize the Master
program of Business Economics and
Management under MAICh CIHEAM.
This is not an exhaustive study and any of the
concepts debated under the herein may
subsequently be analysed under different
study cases depending on location, industry,
political or economic context.
6

ACKNOWLEDGEMENTS
This thesis has been developed with the
special contribution and guidance of all the
people
who
participated
to
the
accomplishment of this study. I would like to
acknowledge
and
demonstrate
my
appreciation and deepest admiration to
everyone that supported me on my quest.
I would like to thank my supervisor Prof. Dr.
Marios Katsioloudes for his support and
guidance. His comments and ideas have
without a doubt been very helpful in
overcoming the challenges that appeared
thorough the development of the study.
I would also like to extend my thanks to the
head of the Masters Degree Program in
MAICH, Dr. George Baourakis, who through
his teaching, leadership and advices has given
me the knowledge and motivation to develop
this thesis to the best of my capability.
REFERENCES
[1] Conger, J.A., Riggio R. E., 2007, The practice of
leadership: developing the next generation of leaders,
John Wiley & Sons, Inc., ISBN-13: 978-0-7879-83055, p. 331
[2] Dona, I., 2008/2009, Rural economics - course
notes, UASVM Bucharest, Romania
[3] Goodman, S. J., 1982, How to Manage a
Turnaround, Macmillan Publishing House, ISBN13: 978-0029124802, p. 183
[4] Mateoc-Srb, N., 1999, Agricultural Exploitation:
past, present and future, Agroprint Publishing,
Timioara
[5] Sloma, S.R., 2001, The Turnaround Manager's
Handbook, Beard Books, ISBN: 1893122409, p. 242
[6] Vidican, G., 2008, Land Reform and Land Use in
Romania, Rural Development and Food Security
Magazine
[7] Wren, D.A., 1995, Henri Fayol: learning from
experience, Journal of management history 1 (3):5-12