Company in Crisis Essay Example | Topics and Well Written Essays - 5250 words

Company in Crisis - Essay Example Research questions: taking failure as a phenomenon in everyday life that ought to be crossed either by winning or not we are left with the questions about the ways to win the debacle. In a business firm that faces distress, the big boss must get himself equipped with the capabilities to retrieve answers to questions on the cause and depth of the crisis and then questions regarding the salvation process are to be evolved. The purpose of the research that I conduct is to elucidate answers for these questions about the cause and depth of the distress simultaneously finding the way in which organisation culture has to be reformed or remodelled to get the favourable results in the turnaround process. Changing the organisation culture or cultural renewal is the vital part of the turnaround process, since culture is the base of the entire realm of a business. The methodology of turnaround comprises mainly of grass root changes. Turnaround decisions are hard to conceive, although everybody i n a crisis torn company is eagerly waiting for a fresh mechanism to thrive. I have collected feedback data from many companies worldwide that underwent crisis management and companies that foresaw the crisis and adopted prudent approaches to circumvent the crisis. The research papers and journals on the subject of crisis management were of highly helpful in my research. Throughout the search I found that a strategic change was a must in the turnaround endeavour. A company shows symptoms of distress in six ways. They are: 1. Dividend reduction 2. Plant closing. 3. Losses. 4. Lay offs. 5. CEO resignations. 6. Plummeting stock prices. Operating losses of a company results in the reduction of its capital leading the firm towards bankruptcy. In Kenya, companies such as Barclays Bank, Standard Chartered and National Oil Corp are laying off their staff. Many a companies are left with options to take turnaround steps in the following ways only. 1. Disposing of real property. 2. Merging with other firms. 3. Reducing capital spending on R & D. 4. Issuing new shares. 5. Negotiating with creditors. 6. Liquidation. 7. Lay offs. Of these a successful negotiation with the creditors to extend the duration of debt servicing, interest and paying period fetches a good result of saving the company from liquidation. (Jonah Aiyabei, 2000). 1.1 CAUSE OF THE CRISIS Corporate misconduct is the root cause of crisis to creep in a company. The direction of movement of corporate behaviour is normally from top to the bottom. Integrity must permeate a company from the level of chief executive who are supposed to blend ethical values to their traits of integrity. The survey results of the Investor Responsibility Research Center, Washington D.C., survey of board practices and pay, 2004 delineates that an internal campaign organised by the CEOs emphasises the company was taking the reforms seriously and provide an opportunity for discussion among the employees. Responses received from many of the respondents revealed an inability and impossibility to legislate morality and ethics and at the same time greed was felt at the core of many of the past problems. A grade point average (GPA) of 2.6 in the field of accounting management encompassed the view of the respondents that CEOs should meet with department heads and create a direct