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  is a process dedicated to corporate renewal. It uses analysis and planning to
save troubled companies and returns them to solvency. Turnaround Management involves management
review, activity based costing, root failure causes analysis, and SWOT analysis to determine why the
company is failing. Once analysis is completed, a long term strategic plan and restructuring plan are
created. These plans may or may not involve a bankruptcy filing. Once approved, turnaround
professionals begin to implement the plan, continually reviewing its progress and make changes to the
plan as needed to ensure the company returns to solvency.


There are 4 different stages during a turnaround process:
1. The evaluation stage
2. The emergency stage
3. The stabilization stage
4. The return to growth stage
.
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According to Stuart C. Gilson there are three critical hurdles or challenges that management faces in
any restructuring program:
1. Design: What type of restructuring is appropriate for dealing with the specific challenge, problem, or
opportunity that the company faces?
2. Execution: How should the restructuring process be managed and the many barriers to restructuring
overcome so that as much value is created as possible?
3. Marketing: How should the restructuring be explained and portrayed to investors so that value
created inside the company is fully credited to its stock price?


 
  
Efficiency and profitability are major factors for manufacturing companies. Consistently downsizing all
systems to current requirements, however, poses an acute danger to a company¶s ability of responding
to future changes in the market. Frequently, a radical and rapidly executed restructuring is the only way
to prevent a company from insolvency. The main challenge, however, is to achieve a sustained
turnaround that takes the entire company to a higher performance level.

Oliver Wyman pursues an integrated restructuring approach. Our typical restructuring concepts are
based on three pillars:

 ? Strategic restructuring: The focus is on core markets and promising business segments. Corporate
divisions destroying value are divested consequently.
 ? Operational restructuring: It focuses on leaner organization and leaner processes, especially on the
simplification of manufacturing networks and corporate structures, as well as on maximizing efficiency
and effectiveness.
 ? Financial restructuring: A combination of cost reduction, more flexible structures, and the development
of a sustainable financial concept.
Since the level of success of a restructuring process depends on the manner of its execution, Oliver
Wyman ensures that in its projects
 ? the overall financial situation is as transparent as possible and that the influence of the identified
restructuring measures becomes clear,
 ? analysis and concept development which considers the information needs of lenders is conducted
rapidly,
 ? the most relevant people from the client¶s organization are involved in order to achieve acceptance for
the implementation of improvements,
 ? a consistent project management and controlling process is established during the implementation
phase to ensure that the pursued improvements are fully realized,
 ? all stakeholders are continuously informed and involved in order to identify risks and avoid
counterproductive conflicts.
Oliver Wyman has successfully restructured companies of different industries and sizes. Our
contribution is our unique combination of distinctive industry know-how and comprehensive
restructuring expertise. Our restructuring competencies include

 ? independent reviews of business plans & business work out strategies,

 ? development of restructuring concepts,
 ? execution of restructuring and turnaround programs,
 ? conducting debt restructuring,
 ? development of divestment strategies,
 ? and distressed M&A support.



* 


Client: SATO Office Furniture Industry SA

Industry: Furniture Manufacturer
Country: Greece and Germany Project
Duration: October 2004 ± October 2005
Function: Turnaround Director
Referees: Dimitris Roussis, Group General Manager
Peter Schwab, General Manager
Klaus Lohne, HR director

*  

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The SATO Group, established 1964 and headquartered in Athens, is a manufacturer of furniture and
seating products with an annual turnover of ¼ 77 million. The company employs some 500 staff.

In 2004, Sato acquired a German seating product manufacturer with 150 staff but a 10 years history of
producing accumulated losses of some ¼ 30 million.

The task was to turn the company around and lead it into the profit zone.

Reporting was to the General Manager.


 :
The German operation suffered from problems in the areas of management, product management,
marketing, distribution and finance.

However, the company had an excellent pedigree and a leading technology advantage; its products had
the potential to clearly outperform all existing competitors in the field of ergonomics, leaving clear blue
water between them.


:

Several issues had been identified and needed to be resolved:

‡ The product range needed a complete makeover. Products were dated and the range too wide.
‡ The organization needed downsizing and reorganization. The current structure was resulting into
severe cash-flow problems.
‡ Leadership, strategy and direction needed to be implemented. Qualification and motivation were both
underdeveloped across the departments. Some departments competed against another instead of
building teams.
‡ A rapid roll-out, nationally and internationally was overdue.
‡ Repositioning and marketing needed a complete makeover and re-launch.

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Immediate solutions included, amongst others

‡ Headcount was reduced by 30% (from 150 to 100 staff), easing the financial burden.
‡ Half of the sales force got replaced, leading to better sales results.
‡ Leadership was implemented and Management by Objectives introduced, implementing clear
direction and motivation.
‡ Unprofitable products were abandoned, cleared and a focus put on R&D and NPD, making the
company competitive, distinguished and improving profitability.
‡ The companies true USB was stressed and a marketing campaign designed and implemented, leading
to higher market shares.
‡ A rapid, aggressive roll-out took place, including
o Increasing the number of distribution points throughout Germany
o Improving the quality of dealerships, carrying out a qualification and motivation initiative
o Heavily promoting the products in China, with a kick-off presentation to the A&D community in
Hong Kong
o Opening of a showroom in Dubai and training local sales people
o Appointing a number of dealerships in Russia o Entering cooperation in France and Canada
o Obtaining accreditation to supply the US government After 6 months, in March 2005, the company
was turned around, achieving highest ever sales and first time ever profits.