Title: An application of corporate turnaround strategies to turn around declining business in the sugar industry:. This study aimed to test the impact of corporate turnaround strategies in the sugar industry. An opportunity presented itself to the researcher to apply turnaround strategies to improve the declining performance of one of the factories in a sugar manufacturing organization.
After applying the turnaround strategies an evaluation was done to measure the impact on performance and quality. An experimental research strategy was used to test the cause and effect of turnaround strategies on both factory performance and product quality. Based on the available literature and the experiment, a suggestion was made as to when to start with turnaround strategies in a sugar factory as a third objective.
Introduction
- The background
- Motivation for the study
- Focus of the study
- Problem statement
- Research objectives
- Hypothesis
- Theoretical framework
- Assumptions
- Scope of the study
- Limitations
- Dissertation outline
- Summary
Turnaround strategies were used to solve many of the problems that were slowing down performance and turned the company into a profitable unit of the organization. This research is conducted in a practical way by testing the applicability of turnaround strategies in the sugar industry. In a literature review for the project, the researcher identified a gap between current industry problem-solving strategies and turnaround strategies.
There is no evidence that turnaround strategies have ever been implemented in the industry, based on the industry literature. However, before developing a model, the impact of turnaround strategies on plant performance and product quality was evaluated. All scientific turnaround strategies applied in the sugar industry in South Africa are said to have been published in SASTA, SIT and ISSCT proceedings.
Literature review
- Introduction
- Sugar industry in Southern Africa
- History
- Challenges facing sugar industry
- Addressing the challenges
- Theoretical review
- The turnaround in perspective
- Cyclical changes of business and the turnaround
- Performance measurement
- Causes of performance decline in business
- Some common turnaround strategies
- Challenges to turnaround
- Conceptual framework
- Literature review summary and research gap
Organizations often face declining performance leading to financial crisis or even failure. 2017, p. 207) define organizational decline as the deterioration of the company's performance due to a continuous decline in internal resources. The crisis was repeated immediately after the turn. 2017, p. 207) define organizational decline as the deterioration of a company's performance due to a continuous decline in its internal resources. According to Santana, et al. 2017, p. 207), the accounting reports of the previous 2 to 3 years are more reasonable to give a clear picture of the performance.
The causes of the decline include governance; human resource policies; employee attributes and structural characteristics of an organization (Santana, et al., 2017, p. 207). Ravaghi, et al., (2017, p. 6) interestingly identify simple but damaging internal causes of decline: organizational "eyes off the ball"; arrogance; resistance to external pressure; lack of appropriate response to the external environment and lack of learning from underperforming organizations. The retail business is very sensitive to recession and must have strategies to mitigate the downturn (Mann & Byun, 2017, p. 24).
As Mann & Byun (2017, p. 25) suggest, the media tends to highlight negative circumstances more closely than positive ones. Hoffman (1989, p. 59) claims that if the causes of the recession are internal, top managers are replaced by outsiders 90% of the time. Of the 17 turnaround studies examined (Ravaghi, et al., 2017, p. 7), 11 CEOs were replaced and 10 cases of senior management replacement.
Mann & Byun (2017, p. 26) discuss in detail the cost reduction through form of layoffs in the retail industry. In contrast to layoff, Santana, et al. 2017, p. 207) argues that many scholars point to the universality of retrenchment without considering the underlying issues. Some specific causes of decline can be postponed until the recovery period (Santana, et al., 2017, p. 207).
Workforce Downsizing: My Deteriorating Employee Performance During the Worst Period of Organizational Vulnerability (Santana, et al., 2017, p. 207). Santana, et al., (2017, p. 207) suggest that employee productivity can be improved through intensive training to improve current work-related skills, especially for manufacturing units. Mann & Byun (2017, p. 29) discuss turnaround strategies during a recession, where some financially muscular companies acquire struggling companies within the same sector.
Research design and methodology
- Introduction
- Research design
- Study site
- Target population
- Sampling strategy
- Sample size
- Research instrument
- Data analysis
- Access to data and Ethical considerations
- Summary
23 the main objective of the study which is to test the effects of the independent variable on the dependent variables, this is an experimental study (Sekaran & Bougie, 2014, p. 102). This is the field experiment as the study was done in a natural environment where work continued normally (Sekaran & Bougie, 2014). The data used in this research are spread over several years, so it is a longitudinal study.
The opportunity to conduct this research in this factory arose when the factory's management was looking for ways and means to revive the ailing company. Sampling selective parts of the campaign could misrepresent the data and the study as a whole. This study used secondary data from the previously collected data, which is done during normal use.
Therefore, the first and last 2 weeks of each campaign were considered extremes in this study and were excluded. Therefore, the clustering of data in this study follows the one-stage cluster sampling method, except that sampling was not done from clusters. In this study, there is no sample, but rather extensive census data covering 22-26 weeks of each campaign.
The time lost due to operational interruptions gave time efficiency to the section where the modifications were made. The data used measures how well the production section is doing as part of the business on a daily basis. There is high confidence in the validity and reliability of the data used in this study.
Data was collected completely and accurately, and then analyzed only for the purposes of the research.
Results
- Introduction
- Impact of niche product on sales
- Evaluation of turnaround impact on boiling house recovery (BHR)
- Evaluation of turnaround impact on time account
- Evaluation of turnaround impact on throughput
- Evaluation of turnaround impact on product quality
- Summary
It should be noted that in the 2017/18 picking period there were large fluctuations in the weekly production. Several statistical analyzes were performed to test the overall effect of the introduction of niche products in the company. 30 Table 4.2 presents a summary of descriptive statistics for the four seasons considered for this study.
However, BHR depends significantly on the quality of sugarcane juice entering the factory (history effect). Weekly data for all seasons of BHR were put on data analysis program for descriptive analysis. Paired t-test was performed to check if there was statistical significance in the difference between 2016/17 and 2017/18 samples.
From figure 4.5 it should be noted that the 2016/17 season, which was rated as the worst, had a stable performance for most weeks of the campaign. The following seasons 2017/18 and 2018/19 had poor starts which remained poor throughout the 2017/18 season while 2018/19 improved significantly during the second half of the season. However, it was noted that the 2018/19 season had a more consistent time account from week 17, so the total time lost is below all other seasons.
It should be noted that all other trends except 2018/19 have a sharp decline towards the end. Although these numbers look almost the same, the volume of complaints was very high for 2016/17 and 2017/18, as shown by costs. High moisture and grain size for 2018/19 season only affected the handling of the product, but it remained usable.
This chapter lays a foundation for the next one, the discussion of results in connection with the objectives of the study.
Discussion
- Introduction
- Turnaround strategy 1: Selective product or market
- Turnaround strategy 2: Asset redeployment
- Boiling House Recovery (BHR)
- Time account
- Product quality
- Throughput
- Summary of discussion
- The turnaround model
- Summary of model
- Concluding remarks
After the shortfall in product quality, an assessment of the entire system was conducted and it was determined that when plant modifications were implemented, quality control element was missed. An overhaul of the entire quality assurance department was done to improve quality control standards. The next step was to test the importance of this strategy to achieve the objectives of the study.
In some parts of the factory, carbon steel was replaced with stainless steel to eliminate the risk of rust. There was then a significant improvement and it remained higher until the end of the season. The common behavior for all trends is a significant drop at the end of the season.
The other measure of recovery, although it includes part of the factory not covered by this research, is cane to sugar ratio. Statistical data in 3 of the 5 evaluated parameters did not prove a cause and effect relationship of reversal. A part of the project was commissioned during the evaluated season and yet that commissioning complicated the start-up.
Due to the noted positive impact of a turnaround, the model was developed as one of the objectives of this study. If a turnaround is necessary, a 5-step model has been drawn up as the foundation of the sugar factory and can be regarded as a framework. In a factory setup, production speed; efficiency and time accounting are some of the inputs for identifying declining performance.
However, the solutions must be in line with findings from the internal and external analysis. One of the frameworks presented is the 1998 Aaker's conceptual framework for analyzing organizational and strategy implementation requirements (Hourani, 2017, p. 17). The cause and effect analysis was performed and the results showed null hypothesis (H0) in 3 of the 5 factory performance parameters tested.
Conclusion and Recommendations
- Introduction
- Conclusion
- Implication of the study
- Limitations of the study
- Recommendations related to research objectives
- Recommendations for future studies
- Summary
Another objective of the study was to determine at what point in the business turnaround strategies should be used. Based on the cause and availability of resources, projected timeframes for the initiation of turnaround strategies were determined. One of the key factors in the mentioned time frames is agency problems, especially when the causes are internal factors.
The turnaround model developed in this study can be used by any factory facing the performance decline in the industry. Application of turnaround strategies in the pilot plant was intended to improve performance and thus profits. However, when evaluating the turnaround effect, it was found that indirect benefits had been introduced.
The null hypothesis suggested by statistical analysis was not completely conclusive as null relationship of reversal strategies. The positive trends established from the data analysis were enough to identify the impact of turnaround strategies, even if in some cases this could not be proven statistically. There could be a huge opportunity for cost savings if this study were to cover the entire organization, including HR, Finance and Logistics departments.
It would be important to measure and document these benefits in the future as part of the project. The turnaround strategy implemented in one country may not necessarily be an easy success in the next. Turnaround strategies may have been used in the sugar industry before, but there was evidence from the literature to support this.
However, the time frame was rather narrow to provide statistical evidence, although there was conclusive evidence of an impact of turnaround in a factory.
