Turnaround strategies are steps taken to improve the performance of companies experiencing a declining performance. These strategies can involve reducing costs, changing management, restructuring assets, and changing the marketing mechanism. They can lead to financial stability and profitability or improve corporate reputation and brand status.
The role of strategy in the turnaround process:
The main objective of turnaround strategies is to address the problems that led to the decline in companies'companies'ce and restore confidence in their performance. This is done through a deep analysis of internal and external strengths and weaknesses, areas that need improvement, or even a study of external factors that led to a decline in performance, such as an economic downturn or changing customer tastes (Hosseinzadeh & Nematollahi, 2020).
The turnaround strategies of Qantas:
According to Bloomberg Markets and Finance (2019), Qantas is an Australian airline that suffered from a decline in performance until 2014, when the new CEO, Alan Joyce, implemented several turnaround strategies that improved performance and put the company back in a better position. The company suffered from a decline in demand for its international flights due to high prices and fierce competition from low-cost companies, in addition to an old fleet of aircraft that consumes fuel.
The new cost-cutting plan reduced its workforce and replaced aging aircraft with modern, fuel-efficient aircraft, also adding programs to improve customer experience and enhance brand loyalty. Finally, the company restructured its network of air routes and canceled unprofitable routes. These strategies led to $557 million in 2015, compared to a loss of $2.7 billion in 2014, and profits continued to be $1.03 billion in 2016, $852 million in 2017, and $1.2 billion in 2018 (Heiets, Oleshko & Leshchinsky, 2021).
The validity of these strategies for J. Crew:
Because airlines and clothing companies differ in the mechanism of their operations, Qantas' exQantas'e can be generalized on J. Crew in some few axes, the most important of which are cost-cutting measures by closing many useless sales outlets, laying off employees, improving product offerings and customer experience as Qantas did, such as enhancing the shopping experience. Another major problem for J. Crew is debt. It had to find alternative financing options and reschedule these debts.
Conclusion
According to Gotteiner, Mas-Machuca & Marimon (2019), there is a standard that companies must work on, which is to renew the blood of the executive management every ten years or less, as this new administration will adapt to the changes in tastes, techniques, and modern techniques used. In the example of Yahoo, one of the largest and first companies that worked in Internet services and e-mail, it suffered from obsolescence in how its executive functions could have kept up with the significant change that occurred around it in this sector (Oliver, 2017). A turnaround strategy requires a careful analysis of strengths and weaknesses, an understanding of the competitive landscape in the market, and an action plan that can be implemented.
References
Bloomberg Markets and Finance. (2019, June 7). Bloomberg turnaround: Qantas Retrieved from https://www.youtube.com/watch?v=iuO0_cJ-L_k [23:55]
Gotteiner, S., Mas-Machuca, M., & Marimon, F. (2019). Turnaround types, stages, strategies, and tactics: Putting things in order. European Accounting and Management Review, 5(2), 12-37.
Heiets, I., Oleshko, T., & Leshchinsky, O. (2021). Airline-within-Airline business model and strategy: a case study of Qantas Group. Transportation Research Procedia, 56, 96-109.
Hosseinzadeh Shahri, M., & Nematollahi Sarvestani, M. (2020). Business model innovation as a turnaround strategy. Journal of Strategy and Management, 13(2), 241-253.
Oliver, J. (2017). Is “transgene"ational response” a hidden"cause of failed corporate turnarounds and chronic underperformance? Strategy & Leadership, 45(3), 23-29. Retrieved from ProQuest Central