Turnaround strategy is a retrenchment plan adopted by a company when it realizes that a wrong decision was made and it needs to be adjusted before causing more harm to the organization's profitability. Embracing a turnaround strategy is turning around from a wrong decision and changing from an organization of making losses to one that is profitable. The following are some of the indicators that an organization requires turnaround strategy. When the organization is experiencing poor management and the losses made are continuous. An organization needs to rethink when its market starts to decline or when the employee’s productivity is deteriorating. I would be wise for an organization to change its strategy at the moment when it realizes that its services and products are not competitive in the market. A retrenchment strategy is also needed when functional management is of poor quality. These strategies are essential for the survival of the company.
Chipotle Mexican Grill is a perfect example of an organization that has adopted a turnaround strategy. Since the year 2015, the company has been experiencing a decline in its level of profitability as a result of the crisis in food safety. The flow of customers into the restaurant has decreased as well causing a huge loss to the organization. Chipotle developed a strategy in the form of reward program so as create a better relationship with their customers and make them feel at ease after the few crises of the safety of food. The strategy has worked well for the organization; the sales increased by 2.2% and the revenue by 7.4% in the first quarter. There was also a 33% increment in the share earnings; this was above the estimated amount by analysts. One notable difference after the strategy was embraced is the huge increase in the number of orders that were made online. It is an indication that the organization is improving.
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