Business Turnaround & Organizational Transformation (BTOT)

Learning Diary

Arpit Agarwal (17061)

Sessions 5 | Date: 29 June 2018 | Case: MCFL (B)- Trade Union

 Trade Union Leaders: The main objectives for trade union leaders are
o Control at the workplace which derives power from membership of the
employees i.e. the active union members. Other source of power is
making the management weak. This can be done by taking away the
discretionary powers of the management which is done by increasing
the rules, regulations and procedures at the workplace.
o Career advancement of the trade union leaders. They are political
ambitious (MLA etc) which require people and financial support.
o Higher the unionization at the workplace higher would be the work
description of the employees as the rules and regulations would be
clearly defined.
 Turnaround: Turnaround of the firm cannot happen until and unless
managers get back their power/control in their hand. It is also important the
right signal is sent to the stakeholders. For example even though the firm may
suffer from conducting a strike at the plant, it is imperative to communicate to
the employees that the plant can be run without them. This would make them
believe lesser in the power of the trade union leader and help them restore
power/control in the hands of the management.
o In Case Mr. Mehta: He instigated the strike to restore the control back
to the management. Instigating the strike is a risky affair however he
continued with the strike because he knew the plant could run without
the workers with the limitation of the warehouse storing capacity. Also
it’s not the strike which is important but the end result of the strike
which highlights who have control of the plant.
 Mr. Mehta knew that the he could sustain the strike for a period
longer than the employees. This is because the length of the
strike of workers would depend on:
 Savings of the employees
  Family pressure and engagement in the work\
 How to instigate strike?
o It’s important to show that the union leaders have no power and the
management is the one which holds all the power which can be done
by insulting them in-front of the employees. For instance, the union
leader can be frisked numerous time to symbolise the power of
management.
 Overall turnaround: This turnaround strategy is not sustainable in the long
run. It would give positive result in the short run. The employees would exert
control over the employees rather than commitment to the firm. This would
result in higher attrition of employees and cause more issues in the future.
 Sick enterprises: The sick enterprise has unused assets and people which
can be utilised properly for their turnaround. This can be done in two ways:
1. Development efforts: This strategy involves putting the unproductive
assets to alternative use which is in more demand. This would involve
some developmental efforts on the part of the firm.
2. Surgical Turnaround: This practice involve selling unwanted assets and
releasing unwanted people from the firm and start using this free capacity
for some other work. This process makes the firm lean and thin
 Completion of turnaround: The turnaround is not complete until and unless
the below stated three processes are undertaken. Stopping at one stage may
provide positive result in the short run however it may not be the complete
solution to the problem.
o Surgical: It represents the operations undertaken to remove the crux
of the problem
o Ward: After the harsh steps it is important that the area under study is
kept under-observation and checked whether no further reactions are
coming up. Also it’s the time where the patient is allowed to recover
from the after wounds of the operations of turnaround.
o Rehab: It is the strategic reorientation of the organisation to ensure the
turnaround is undertaken properly.

Surgical Ward Rehab

 Sessions 6 | Date: 29 June 2018 | Case: The rise and fall of Nokia

In the session the case: the rise and fall of Nokia was discussed.

 The major reasons for the fall of Nokia from the high 2007 were:
o Failed attempts at adapting to the technological shift in the industry
o Intense competition in both high and low ends of telecom by global
players
o High diversification through merger and acquisitions by cash
 History of Nokia- Nokia started as a firm operating in timber industry
focusing on pulp. After that it acquired firm up and down and moved into cable
industry, consumer electronics, telecom industry etc. The firm had high cash
which they utilised by acquiring firms in various industries and geographies.
 Huge cash reserve deteriorates over time due to time value of money, thus it
is better to invest the cash somewhere productive rather than keeping them
idle with the firm.
 Types of Acquisition:
o Poor performing firm acquisition: The price of such firms would be
low and generally at a discount. Such firms perform poor because of
market (external) factors in the industry and thus the recovery of the
firm is very tough. The firm may perform poor because of internal
factors of the firm which is easier to revive and generate wealth.
o High performing firm acquisition: The price of such firms would be
high and may involve some premium. This premium is because of the
high performance of the assets of the firm or because of the synergy
that would be generated for the acquirer post acquisition.
 Analysing Balance sheet: While analysing turnaround strategy of a firm it is
important to analyse the balance sheet of the firm which can help us identify
the problem generating point of time. One of the important ratio for analysis is
Return on capital employed (ROCE)
o ROCE= Profit = Profit * Sales
CE Sales CE

This represents Margins which is Efficiency in deployment of the funds

affected by which is affected by internal factors
 Position in the market like resource utilisation.
 Market condition