| dc.description.abstract | Globalization of markets and competition requires organizations to adapt to
change incessantly. When firms fail to do so, performance declines and if the
decline is not reversed, such firms can end up in bankruptcy. A turnaround
strategy aims at arresting the decline and restoring a firm to a path of
sustainable profitable growth. The implementation of a turnaround strategy
determines whether a firm will regain its financial health or whether it will
eventually end up in bankruptcy.
Existing literature on corporate transformation indicates a high failure rate in
turnaround efforts. The high failure rate is not caused by the turnaround
strategy per se, but by poor and ineffective strategy implementation. While
crafting a suitable strategy for an organization in distress is very important,
strategy implementation is even more crucial. This is an aspect of strategic
management that has persistently been underscored by those practitioners in
management who have written about their experiences in successful
corporate transformations.
This research report investigates the successful implementation of a
turnaround strategy by Morison Engineering Limited (MEL), a medium-size
Kenyan company. MEL nearly went into receivership in 2002 following many
years of poor performance. The company implemented a successful
turnaround strategy during the period 2002 to 2007 and has returned to
good financial health. MEL hopes to record an operating income of Shs.16.2
million in financial year 2007, the highest in its twenty-two history, and is
poised for faster profitable growth during the next two years.
The case study research involved collection of primary data during in -depth
personal interviews of two directors, the CEO and departmental managers of
MEL. The primary data was supplemented by secondary data obtained from
the Company. Data from MEL's audited accounts has been reformatted and
presented in the appendices. It depicts the improvement in the company's
performance during the implementation of the turnaround strategy.
Research findings indicate that the turnaround strategy implemented by MEL
consisted of a retrenchment strategy, a recovery strategy and a corporate
strategy. The simultaneous implementation of the three strategies has enabled
the company to make substantial recovery and regain its leading position in
the fire protection industry in Kenya.
The MEL turnaround presented an opportunity to study a successful strategy
implementation in a Kenyan environment. The study confirms that a
successful implementation of a turnaround strategy requires a unique blend
of leadership and management processes capable of meeting the many
challenges of a turnaround situation. | en |
