Restructuring Strategic Growth 18.03.10

RESTRUCTURING FOR STRATEGIC GROWTH
Dr. Joachim Behrendt
AGENDA
Financial Crisis and World Recession A New Economic Environment

A Zero-Base Approach to Strategy Development
How to Take Advantage Strategic Analysis and Strategic Options
Suitability, Acceptability and Feasibilty The Evaluation of Strategic Options
Restructuring Adopting Your Business to a Healthy Growth Strategy
Strategy Implementation and Control Managing the Workstreams
Key Success Factors The Role of the Restructuring Team
3/22/2010
Restructuring for Strategic Growth
AGENDA

3/22/2010
FINANCIAL CRISIS & WORLD RECESSION
S&P 500 / FTSE 100 / Hang Seng

After the subprime crisis and the collapse
of Lehman Brothers, the meltdown of the
world financial system could only be
avoided by concerted and strong action of
central banks and governments
In addition to putting interest rates close
to 0, central banks pumped liquidity at a
previously unknown pace into the
economy (quantitative easing),
governments rescued failing banks, and
accounting rules for banks were changed
The world financial crisis was followed by
a deep world recession, simultaneously
effecting nearly all countries and all
sectors
To speed up the recovery process,
governments implemented fiscal stimulus
packages for supporting private
consumption and exports
Source: FT / Thomson Reuters

3/22/2010
Since first quarter of 2009, stock

markets and business confidence
started to recover
Gold / VIX / Employment

Gold, traditionally a safe haven in times of
high economic uncertainty, remains at an
all-time high
The VIX volatily index, Wall streets fear

gauge, is still very volatile, and has risen
again 36% since 19.1.2010, while the
Baltic Dry Index fell 20% since then
Source: FT / Thomson Reuters / I-Spirit

3/22/2010
Companies returned to profitability in

2009 mainly due to strict cost and
capacity cutting
Consequently, unemployment rates are
rising, depressing a consumption-based
economic recovery
Fiscal stimulus effects are coming to an
end, putting further pressure on
consumption
Economic Outlook Europe
The economic outlook remains patchy, governmental debt comes into the spotlight
The underlying reasons of the financial crisis, excess liquidity and a loose regulatory
framework, have only partly been tackled; cheap liquidity is still provided by central banks
and governments
In the mid run, central banks will have to take liquidity out of the markets in order to
counteract upcoming inflationary trends
In the mid run, increased government debt has to be repaid, again decreasing liquidity
Currently, financial markets take again the same medicine that made them ill
3/22/2010
1. The recovery of the stock markets is driven by yield-searching liquidity, and it is not fully
reflecting economic reality. Higher company valuations are partly based on higher
earnings, but they are mainly the result of cost cuttings and not of a demand- and salesdriven growth ("zero-job growth").
2. The worst of the crisis seems to be over, but the effects of upcoming inflationary
pressures, governmental debt burdens and the resulting liquidity reductions and austerity
measures are currently not priced in. In general, the road to recovery will be long, slow and
patchy.
3. Economic recovery will occur faster in developing economies, especially in countries that
have healthy budgets and balances of payments, and that are rich in commodities. USA will
follow, Western Europe will be at the end of the train.
4. Companies and governments are using the current situation to borrow longterm for cheap.
On the other hand, these additional funds available will lead to an increased pressure for
profitable investments and, among others, increased M&A activities.
5. The current crisis marks the beginning of the end of the dominating economic position of
the Western World, and of the outstanding role of the US-$ as the global reserve currency.
3/22/2010
A New Economic Environment Some Hypotheses
Economic Indicators Turkey

Economic discussions are currently dominated by
policy uncertainties and an upcoming election year
Ending the discussions with the IMF on a standby
agreement had virtually no effect, treasury could
comfortably meet its borrowing requirements
After recent rating upgrades, Turkey is on the way
to become an investment grade country
Inflationary pressures increased but can probably
be well maintained in the upcoming months
Production is on its way back to sustainable
growth, currently mainly domestic-driven (chemical
goods, agriculture, but not automotive, metals)
Inflation and production growth increase the
pressure on the Central Bank to increase interest
rates in the next months, yield curve is steepening
Economic recovery helped to increase the tax
income, main fiscal risk factor is election spending
Exports and imports started to recover, balance of
payments currently under control
Compared to other countries, Turkey could
maintain and even improve its relative stability
Source: Turkstat, ISE, ING Bank
3/22/2010
Key Indicator Forecasts (Turkey)
Sources: Turkstat, CBT, Treasury, Ministry of Finance, ING Bank , ING Global Forecasts
3/22/2010
AGENDA

3/22/2010
10
A ZERO-BASE APPROACH
Turkish Textile Industry
Source: DPT, Ekonomik Gelismeler, Eyll 2009

3/22/2010
In 2008, the Turkish textile sector was

hit hardest in terms of production cuts.
In 2009, clothing experienced a modest
recovery relative to other sectors
Capacity usage, on the other hand,
remained virutally unchanged
probably due to heavy capacity cuts
More than 150,000 people lost their
jobs in textile and clothing sector in the
last year
Textile companies started applying for
short working hours, supported by IKur
Textile exports have dropped by 30% but not more than other sectors
However, in 2009, prices in the sector
have dropped by more than 5%,
showing increased pricing pressure
On the other hand, companies in the
sector have used the crisis for successful
restructuring, and for expanding into
foreign markets
11
Implications for Textile Businesses
Bank loans
expensive
and difficult
to obtain
Strong price
pressure ,
especially
from Asian
countries
Change of
regional
demand
patterns
(US, Europe
vs. Asia)
Strategic
Challenges
Significant
Overcapacities in the
sector
3/22/2010
Sector
remains
undercapitalized,
growth
difficult
Pressure on
informal
parts of the
sector will
increase
Sales will
remain
suppressed
for some
time
12
The Risk of Strategic Drift
Source: Johnson / Scholes, Exploring Corporate Strategy
Phase 1: Incremental strategy changes gradually moving away from environmental changes
(e.g. victim of own success)
Phase 2: Strategic drift becomes apparent, or environmental change increases no clear
strategy direction, fluxx
Phase 3: Transformational change to adopt to new environment but late and costly
Phase 4: Alternatively, demise of the organization

Target: Phase 5 early transformational change ahead of environmental change
3/22/2010
13
Zero-Base Approach to Strategy Development
Zero-based budgeting is a technique of planning and decision-making which

reverses the working process of traditional budgeting. In traditional incremental
budgeting, departmental managers justify only increases over the previous year
budget and what has been already spent is automatically sanctioned. By
contrast, in zero-based budgeting, every department function is reviewed
comprehensively and all expenditures must be approved, rather than only
increases. Zero-based budgeting requires the budget request be justified in
complete detail by each division manager starting from the zero-base.
(Source: Wikipedia)
Zero-Base Strategy Development
Question your markets and target customers
Question your products and services

Question your pricing and quality strategy
Question scope and structure of your value chains
Question your existing production capacities
Question your workforce
Question your management and organizational structure
Imagine you could set up your business from scratch
3/22/2010
14
Strategy Development Phases
Phase 1:
Strategic Analysis
Analysis of the environment: Opportunities and threats

Analysis of strategic capabilities: Strengths and weaknesses
Analysis of relevant stakeholder groups and their expecations
Phase 2:
Strategic Choice
Definition of the framework for strategic choice (scope of

activities, markets, geographical scope, ownership structure,
finances, etc.)
Development of strategic options
Evaluation and selection of strategic options
Phase 3:
Strategy
Implementation
Organizational structure
Resource allocation
Resource control
Management of strategic change
3/22/2010
15
AGENDA

3/22/2010
16
Strategic analysis is looking from

customer market perspective
Key to strategic analysis: comprehensive
market research
Example: Shopper Trends (Nielsen)
Example: Market research for

number of store visitors and daily
distribution according to age and
gender (nexum / Akademetre)
Akademetre
Current Views of the Stores
General Statistics by Markets

Daily Distribution of Visitors
BIM / K.Cekmece-3
ChampionSA / Sisli
1.000
0
Migros
Carrefour Exp
ChampionSA
Market
15.01.07
16.01.07
17.01.07
18.01.07
19.01.07
20.01.07
2.603
2.310
2.209
2.105
2.597
3.571
4.127
2.482
2.470
2.448
2.219
3.000
MMM Migros 2.000

/ Merter
Quarter
09:00-09:14
09:15-09:29
09:30-09:44
09:45-09:59
10:00-10:14
10:15-10:29
10:30-10:44
10:45-10:59
11:00-11:14
11:15-11:29
11:30-11:44
11:45-11:59
12:00-12:14
12:15-12:29
12:30-12:44
12:45-12:59
13:00-13:14
13:15-13:29
13:30-13:44
13:45-13:59
14:00-14:14
14:15-14:29
Bim
14:30-14:44
14:45-14:59
15:00-15:14
15:15-15:29
21.01.07
2.098
7.219
3.987
4.000
4.680
6.029
5.000
5.800
5.497
6.208
5.707
MM Migros / 6.000
Aksaray
5.873
Carrefour Express / Umraniye
Number of Visitors
BIM / K.Cekmece-2
6.011
7.000
5.844
8.000
7.628
7.563
9.000
2.050
M Migros / Erenkoy
8.854
Carrefour Express / Maltepe
2.501
BIM / K.Cekmece-1
Aks.
2,5
2,6
3,1
3,1
3,6
4,1
4,6
4,0
4,8
4,8
4,7
6,5
6,4
8,6
6,6
6,9
7,4
6,8
6,5
7,1
9,8
8,4
9,2
8,2
8,5
6,6
Detailed Statistics by Stores

Quarterly Averages of Visitors (1)
Migros
Ere.
1,8
2,4
2,7
2,9
3,3
3,2
3,2
3,3
3,4
3,4
3,6
3,0
4,5
3,7
3,4
3,4
4,1
4,4
4,4
3,4
3,8
3,8
3,6
3,6
3,4
3,9
Mer.
2,2
2,6
3,0
3,6
4,0
3,5
3,1
4,2
3,9
2,9
4,3
5,3
5,9
6,0
6,5
7,1
5,3
6,3
6,3
6,3
7,0
6,0
6,5
5,0
6,6
6,8
Carrefour Exp
Mal.
Umr.
3,7
1,9
4,5
1,8
4,6
1,9
6,0
1,7
6,5
1,3
7,5
1,4
6,8
1,8
8,1
1,6
9,1
2,1
8,8
2,1
9,8
2,8
9,5
2,9
11,3
3,2
13,7
2,8
13,4
2,4
14,5
4,1
14,1
4,4
15,1
4,2
15,2
4,6
13,3
3,8
13,6
3,9
11,6
3,7
13,8
3,7
14,2
3,6
12,2
4,0
15,4
4,1
Champ
Sis.
2,9
1,6
1,7
2,8
2,3
2,6
3,2
3,1
3,6
3,8
4,5
3,5
3,9
5,7
8,1
6,2
5,7
6,1
6,1
6,1
8,1
7,3
9,3
6,9
6,1
7,6
KC-1
1,0
1,1
1,3
1,6
1,3
1,2
1,6
1,7
1,9
1,9
1,9
2,0
2,3
1,8
3,4
3,0
3,9
4,0
3,1
3,5
3,3
2,9
2,9
2,8
3,0
3,8
Bim
KC-2
0,4
0,5
0,6
0,3
0,6
0,6
0,9
0,7
0,9
1,0
0,9
0,9
0,7
0,8
1,1
1,6
1,5
1,9
1,5
1,8
1,4
1,9
1,5
1,3
1,7
2,0
KC-3
1,1
0,8
1,0
1,3
0,9
1,5
1,3
1,1
1,6
1,5
1,7
1,7
2,1
1,5
2,2
2,2
2,1
2,1
2,1
1,6
2,1
2,4
2,2
2,2
2,1
2,4
Ave.
1,9
2,0
2,2
2,6
2,7
2,9
3,0
3,1
3,5
3,4
3,8
3,9
4,5
5,0
5,2
5,5
5,4
5,7
5,5
5,2
5,9
5,3
5,8
5,3
5,2
5,7
11
23
3/22/2010
17
STRATEGIC ANALYSIS & OPTIONS
Analysis Example: Market Research Retail
SWOT Analysis Textile Industry
STRENGTHS
Inside-out view: Resources

Developed market infrastructure
Ability to adopt new technologies & trends
Adoptation of EU standards
(e.g. environment)
Developed sectoral labor force
Entrepreneurial spirit
Abundance raw materials (e.g. cotton)
Modern machinery & equipment
Elasticity and flexibility
Input costs, especially labour & energy

Insufficient proprietary / venture capital
Deficiencies cash / financial management
Lack of access to distribution channels
Large informal market segments
Lack of R&D & established quality control
Burdensome bureaucracy, insufficient
legal infrastructure & copyright protection
Insufficient process & IT management
Price competition China / other

Asian countries
Taxation / Export-import legislation
Political instability foreign relations
Lack of resources
Restrictions on free trade
Development of EU relations
Scarce, expensive, short-term financing
Overvalued currency
Geographical proximity to EU, Middle East

and ex-Soviet countries
Developing relationships regional countries
Increasing opportunities to penetrate new
markets due to quota removals
Small-scale production support exclusive
demand
Turquality
Absorb job losses from developed countries
Source: Kocak, A.M., Turkey in

Transition, January 2006; Own
research
3/22/2010
Outside-inn view: Markets

18
The growth trap

Customer focus is misinterpreted as
serving all customer needs
Growth pressure or the apparent

saturation of the target market often lead
managers to broaden the companys
strategic position
Too often efforts to grow may undermine
the strategy by blurring uniqueness,
Rather deepen the strategic position than
broadening and compromising it
Ways to grow
Internal development
Acquisition
Joint venture / alliances
3/22/2010
19
Options for Strategic Growth
Own branding
Move from contract production to brand ownership
Examples: Vakko, Mavi, LTB, Collins, Balizza, Mudo (home textiles), ...
Foreign outlets
Mainly after domestic branding succeeded, especially Russia / Ex-Soviet countries
Examples: Mavi, Colins, Bilsar, Kiili, Sarar, Sabra, Sabri zel, Cross Jeans, T-Box, ...
Foreign investments / subcontracting
Directly investing in foreign countries, or entering into long-term partnerships
Examples: Baha Tekstil (Uzbekistan), Atateks (Jordan), ahnler (China etc.), ....
Differentiation by design influence fashion
Some companies hired well-known designers, or use top models
Examples: Vakko, Balizza, Zeki Triko
3/22/2010
20
Ways for Healthy Growth
Ways for Healthy Growth (contd)
Subcontracting for international brands

Production, sometimes distribution for foreign brands
Examples: Yeim Tekstil (Nike, Banana Republic etc.), Orta Anadolu Group (Levi
Strauss, Marks&Spencer), etc.
Technical and functional textiles
Fields: Agriculture, building technologies, geology, medical uses, ecology, packing
industry, protective clothing, sportive clothing, ....
Markets both domestic (e.g. Armed Forces) and foreign (e.g. glass fibers)
Highly automated integrated production facilities
Target: shift from labour- to capital-intensive production
Examples: Bossa Denim, Isko, Gap Gneydou
3/22/2010
21
AGENDA

3/22/2010
22
STRATEGY EVALUATION
Strategy Evaluation
Suitability
Acceptability
Feasibility
3/22/2010
Does the strategy fit with organization and

environment?
Screening and ranking of the available strategic options
Scenario planning
Profitability analysis
Cost-benefit analysis
Risk analysis: Sensitivity analysis / simulation modelling
Stakeholder reactions (political dimension)
Funds flow analysis / liquidity planning

Break-even analysis
Resource deployment analysis
23
STRATEGY EVALUATION
Suitability: Product Lifecycle Analysis
Not every growth strategy fits to every product

Product lifecycles reduce strategic options
3/22/2010
24
Is the
competence
valuable?
Is the
competence
rare?
Is the
competence
difficult to
imitate?
Are there no
substitutes?
Disadvantage
no
Yes
no
Yes
Yes
no
Yes
Yes
Yes
no
Incremental
Advantage
Yes
Yes
Yes
Yes
Sustainable
Advantage
Parity
Temporary
Advantage
Choice of strategy depends on sustainability of base competencies

3/22/2010
25
STRATEGY EVALUATION
Suitability: Sustainability of Core Competencies
Carve Out Object 1 - Income Statements - Modul 8
T
Nettoumsatz
Wareneinsatz
Warengruppenspanne
Nicht kalkulierte Vergtungen
Logistikkosten
Inventurdifferenzen
Rohertrag
Personalkosten
Deckungsbeitrag 1
Abschreibungen
Mietkosten
Werbung
Instandhaltung
Materialverbrauch
Fuhrpark
Sonstige Sachkosten/Ertrge
Sonstige operative Posten
Operative Kosten
Deckungsbeitrag 2
Direktkosten
Deckungsbeitrag 3
Indirekte Kosten
DB 4 - EBITA
Bereinigungen/Anpassungen
Bereinigtes/angepates EBITA
Zinsergebnis
Beteiligungsergebnis
Abschreibungen a.d. FAV
Finanzergebnis
Andere auerordentliche Ergebnisse
Ergebnis vor Ertragsteuern
Steuern
Ergebnis nach Ertragsteuern
Kennzahlen (in % des Nettoumsatzes)
Warengruppenspanne
Rohertrag
Personalkosten
Operative Kosten
EBITA
Wachstumsraten (p.a.)
Nettoumsatz
Warengruppenspanne
Rohertrag
Personalkosten
Operative Kosten
EBITA
3/22/2010
2007
01-12
Ist
12,150,665
-9,889,251
2,261,413
219,045
-278,957
-42,115
-102,026
2,159,387
-1,051,694
1,107,693
2008
01-12
Ist
14,278,000
-11,950,316
2,327,684
151,530
-100,380
-55,161
-4,011
2,323,673
-1,205,040
1,118,633
2009
01-12
Budget
16,183,752
-13,539,521
2,644,231
150,331
-180,592
-55,548
-85,810
2,558,421
-1,301,078
1,257,343
2010
01-12
Planung
16,624,456
-13,978,107
2,646,350
170,741
-116,000
-57,962
-3,221
2,643,129
-1,330,691
1,312,438
2011
01-12
Planung
17,300,355
-14,554,434
2,745,921
176,542
-137,227
-59,721
-20,407
2,725,514
-1,358,563
1,366,952
2012
01-12
Planung
17,973,886
-15,160,772
2,813,114
182,258
-129,218
-61,539
-8,499
2,804,615
-1,392,016
1,412,599
2013
01-12
Planung
18,649,304
-15,752,529
2,896,774
187,715
-133,816
-63,336
-9,438
2,887,337
-1,427,982
1,459,355
-102,194
-461,986
20,891
-76,341
-38,170
-199,014
-88,602
16,748
-928,669
189,964
189,964
-117,797
-525,172
-7,697
-118,249
-36,867
-225,613
-252,993
175,802
-1,108,586
148,758
148,758
-126,572
-532,194
-4,860
-84,937
-35,258
-232,735
-77,902
339
-1,094,118
218,320
-0
218,320
-128,779
-549,517
-3,425
-90,980
-36,109
-236,818
-78,045
339
-1,123,332
243,619
-0
243,619
-131,008
-564,470
-1,945
-93,232
-36,976
-245,003
-78,196
339
-1,150,490
262,109
-0
262,109
-133,242
-582,105
-452
-95,882
-37,860
-255,888
-78,350
339
-1,183,439
275,916
0
275,916
189,964
-4,400
185,564
-29,021
-2,000
-31,021
984
159,927
159,927
148,758
148,758
-21,655
-21,655
127,103
-17
127,086
218,320
218,320
-23,821
-23,821
194,498
194,498
243,619
243,619
-23,907
-23,907
219,713
219,713
262,109
262,109
-23,996
-23,996
238,113
238,113
275,916
275,916
-24,090
-24,090
251,826
251,826
18.6%
17.8%
8.7%
6.9%
2.1%
16.3%
16.3%
8.4%
6.5%
1.3%
16.3%
15.8%
8.0%
6.8%
0.9%
15.9%
15.9%
8.0%
6.6%
1.3%
15.9%
15.8%
7.9%
6.5%
1.4%
15.7%
15.6%
7.7%
6.4%
1.5%
15.5%
15.5%
7.7%
6.3%
1.5%
k.A.
k.A.
k.A.
k.A.
k.A.
k.A.
17.5%
2.9%
7.6%
14.6%
11.1%
-27.0%
13.3%
13.6%
10.1%
8.0%
19.4%
-21.7%
2.7%
0.1%
3.3%
2.3%
-1.3%
46.8%
4.1%
3.8%
3.1%
2.1%
2.7%
11.6%
3.9%
2.4%
2.9%
2.5%
2.4%
7.6%
3.8%
3.0%
2.9%
2.6%
2.9%
5.3%
-98,219
-426,140
-52,403
-63,250
-28,603
-165,139
-66,385
64,048
-836,091
271,602
0
271,602
-11,305
260,296
-36,297
224,000
-13,173
-13,173
247,123
247,123
For each strategic option, detailed financial

planning required (business plan)
Based on detailed business plans, pro-forma
financial statements for several periods will
be prepared
Preferred: Preparation of set of integrated
set of financial statements with balance
sheets, income statements, indirect cash flow
statements
26
STRATEGY EVALUATION
Acceptability: Profitability
Forecast: F12
1'000 Trials
Frequency Chart
4 Outliers
.0 2 8
28
.0 2 1
21
.0 1 4
14
.0 0 7
.0 0 0
0
-5 0 0 . 0 0
-2 5 0 . 0 0
0 .0 0
2 5 0 .0 0
Risks considered
Market risk
(quantities / prices)
Raw material price risk
Personnel cost risk
Currency risks
Interest rate risk
5 0 0 .0 0
Forecast: F12
1'000 Trials
Frequency Chart
4 Outliers
.028
28
.021
21
.014
14
.007
.000
0
-500.00
3/22/2010
-250.00
0.00
250.00
500.00
Strategic option 2
provides less risk at
comparable returns
27
STRATEGY EVALUATION
Acceptability: Risk Simulation Modelling
XYZ Proforma Bilano - 01.01.05

Aktif
Pasif
Nakit
10 Satclar
M.Kymetler
0 Avanslar
Alclar
30 B. Kredileri
Stoklar
30 Sermaye
S. Kym.
30
Toplam
100 Toplam
100
XYZ Proforma Bilano - 31.12.05

Aktif
Pasif
Nakit
0.5 Satclar
M.Kymetler
0 Avanslar
Alclar
50 B. Kredileri
Stoklar
40 Sermaye
S. Kym.
60 Donem Kr
Toplam
150.5 Toplam
40
50
15
30
15.5
150.5
30
40
0
30
XYZ Proforma Gelir Tablosu - 2005

Haslat
100
SMM
50
Brut Kar
50
Sat & Datm Gid.
10
G. Yn. Gid.
10
Amortisman
10
Faaliyet Kr
20
Finansman
4.5
Kar
15.5
XYZ - Proforma Nakit Akm Tablosu - 2005

Brt Kar
50
Alclardaki Deiim
-20
Stoklardaki Deiim
-10
Satclardaki Deiim
10
Avanslardaki Deiim
10
Brt Faaliyet Nakit Akm
40
Sat & Datm Gid.
-10
Dier F. Giderleri ve Gel.
-10
Amortisman
-10
G. Vergisi
0
Faaliyet Nak it Ak m
10
S. Kymet Yatrmlar
-30
Yatrm Nak it Ak m
-30
Datlan Kar
0
Sermaye Artrm
0
Kredi Art/Azal
15
Faiz Gelir/Giderleri
-4.5
Finansman Nak it Ak m
10.5
Toplam Nakit Akm
-9.5
Nakit Deiimi
-9.5
1.1.2005 tibariyle Nakit
10
31.12.2005 tibariyle Nakit
0.5
Integrated pro-forma financial statements for each strategic option

Liquidity planning is integrated (indirect cash flow statements)
3/22/2010
28
STRATEGY EVALUATION
Feasibility: Cash Flow Planning
AGENDA

3/22/2010
29
RESTRUCTURING
Typical Restructuring Issues Textile Sector
Insufficient funds, improper financing patterns

Competition by price
No investment in market reserach, R&D

Cost cutting by flight into informal market segments
Underestimated effects of weaknesses in quality and reliabilty
Inefficient production, non-optimized processes
No proper information about cost drivers and profitability products / customers
Insufficient investments into ERP and other IT systems
Over-centralized decision making process, lack of professional managers
3/22/2010
30
RESTRUCTURING
Restructuring
Replacing an existing structure with a new one

- Debt (or debt-equity) restructuring
- Asset restructuring
- Operational restructuring
- Organizational restructuring
- Legal restructuring
- ....
Example: Manufacturing
Company 2009
- Debt / Equity Structure
- Cash Management
- Management Accounting
- Financial Accounting
- Production Planning
3/22/2010
Example: Turkish Textile

Company 2009
- Organization
- HR
- Operations
- Strategy
- Product portfolio
Example: Retail Group 2008

- Legal
- Tax
- Participations
- HR
- Assets
- Organization
31
Workstream Operations
Accounting / controlling, income statement

Accounting / controlling, balance-sheet related
Finance / Treasury: Cash man., liquidity planning
Finance: Debt & equity structure, risk
management, banking & investor relations
Tax: Income taxes, VAT, special consumption
taxes, stopaj, wage-based taxes, SSK&Bagkur,
special restructuring tax laws
Legal: corporate law, articles of association,
third-party contracts
Sales: Forecast & scenarios, price sensitivity

analysis, customer analysis
Production: High-level production planning,
capacity planning
Purchasing: MRP, Supplier analysis
Overhead analysis and allocation system
Value chain analysis
Cost behaviour analysis fixed vs. variable cost in
relation to time
Workstream Organization & HR
Workstream Strategy
Organizational design (functional, divisional,

matrix, etc.)
Organizational chart (management structure,
legal structure, profit/cost center structure)
Employee analysis, legal aspects salaries &
remuneration, contractual & legal rights, outsourced personnel, relation to capacity planning
Employee analysis, abilities standarizing skill set
definitions, standarizing job descriptions, key
personnel definition
Strategy implemementation planning

Definition of strategic tasks
Strategic control
Change management
Markets & customers
Pricing & quality
Scope and structure of the company value chain
Financing and investments
Marketing & PR
Each workstream provides different perspectives on the company

Each workstream is managed separately in each project phase
3/22/2010
32
RESTRUCTURING
Workstream Finance & Legal
AGENDA

3/22/2010
33
IMPLEMENTATION & CONTROL
Formalized Strategic Planning Process

ANALYSIS SECTION
------------------------- 1. Introduction
2. Outside-Inn Analysis: Market

2.1. Sectoral Customer Markets
2.2. Consulting Market Turkey
2.3. HR Market
3. Inside-Out Analysis: Nexum

3.1. Sales & Account Management
3.2. Profitability Analysis
3.3. Project Management
4. SWOT analysis nexum bogazici
5. Branding & Positioning

5.1. Competitor Analysis NM
5.2. Competitor Analysis IT
5.3. Positioning
6. Our Services 2003

6.1. New Media Services
6.2. IT Services
6.3. Consulting Services
PLANNING SECTION
---------------------------
1. Competence Center Pharma
2. Competence Center Tourism
3. Competence Center Textile
4. E-Learning Solutions
5. Consulting Solutions
6. IT
7. NM
8. Overall Project Management & Organization

9. Overall Marketing Strategy
10. Overall Sales Strategy
11. Eskisehir
12. Administration & Accounting
13. LoginIT
7. Next Steps
Involvement of all managers, individual presentation tasks, weekend / evening sessions

Start October, completion including budget December 2004
3/22/2010
34
Assignment of Strategic Tasks

Task
For
Target #
Responsible
Finalization
Date
Definition of services and service levels for all services
Board
15.1.
Review and adjustment of all sales materials / websites according to

service definitions
Sales
31.1.
Definition of A- and B-accounts, assignment to board members and AMs
Board / Sales
15.1.
Improvements of CC file new profit center structure, services review,

budget controlling tools for trainings and investments
Con
31.1.
Netsis / sales file new profit center structure reflectioin
Acc
Asap
Prepare sales Germany
Sales / Joa
15.1.
Formalized departmental evaluation criteria
HR
15.1.
Definition of quantitative targets and bonus system for AMs
Sales / Board
15.1.
Transfer nectar projects and employees creative - IT
Creative / IT
1.1.
Setup of organization for running complete website projects
IT
31.1.
Assignment of strategic targets and strategic tasks for every manager

Deadlines: initial January, afterwards quarterly
3/22/2010
35
Quarterly Review of Targets and Tasks

Main Objective
Area
Availability
Date
Nexum Bogazici Software Development Standard Usage (Java)
Developm.
31.10.2002
28.02.2003
Develop & Continue Partnership Relation with MS
Partnership
31.09.2002
On-going
To be Advanced Level IBM Partner
Partnership
N/A
N/A
Develop and Implement Oracle i-store, Portal builder solutions
Project
N/A
N/A
Complate Auction Module development : B2C->B2B
Developm.
31.10.2002
Complate Work Done Automation System
Developm.
31.11.2002
31.11.2002
Adaptade to MS .NET tools
Developm.
31.11.2002
31.01.2003
Enrich Operating System solution platforms (XP)
System
31.09.2002
Develop Expertization Level at Implementation of GoldMine CRM tool
Project
31.08.2002
Learn IBM Lotus-Domino products to support E-Learning project and others?
Project
31.07.2002
Learn OLAP Solutions: MIS
Project
31.10.2002
31.01.2003
Quarterly presentation of managers about reaching individual strategic targets /

completing individual strategic tasks
Presentation in management meetings with decision about followup measures
3/22/2010
36
Strategic Performance Evaluation

Dept.
Function
Managem.
Dept. Man.
IT
Persons
Criterion
Weight Target fig.

Budgeted net
13% sales
Company net sales

Company operating
P/L
IT capacity usage
projects/ventures/
products
IT resource usage
projects/ventures/
products
IT output quality
Personal + Manag.
Performance
Strategic Target
Performance
Consulting
Consultant
Booked Sales
Offer Success
Project Milestones
Invoiced Sales
Resource usage
projects/ventures/
products
Rebooking rate
Personal
Performance
Strategic Target
Performance
3/22/2010
NA
Actual fig. Calculation
Source
Respon.
Frequency
Range %
Sign
Actual net
sales
Actual fig. :
Target fig.
Budget
Didem
quarterly
50 - 200
Actual fig. :
Target fig.
Budget
Didem
quarterly
-100 - 300
Actual fig. :
Target fig.
Performance
control
Didem
quarterly
0 - 250
Actual fig. :
Target fig.
Resource
control
50 - 200
Actual fig. :
Target fig.
Error report
Alphatest
Didem
quarterly
PM's,
aggregation
Didem
quarterly
0 - 500
Actual fig. :
Target fig.
Employee
evaluation
Filiz,
Joachim
33 - 133
Actual fig. :
Target fig.
Strategy
review
33 - 133
Actual fig. :
Target fig.
CRM
Filiz,
Joachim
quarterly
Tlay,
aggregation
Didem
quarterly
50 - 200
Actual fig. :
Target fig.
CRM
Tlay,
aggregation
Didem
quarterly
0 - 200
Actual fig. :
Target fig.
Resource
control
Didem
quarterly
75 - 150
Actual fig. :
Target fig.
Workdone
Summary
Didem
quarterly
0-200
Actual fig. :
Target fig.
Resource
control
Didem
quarterly
50 - 200
Actual fig. :
Target fig.
CRM
Tlay,
aggregation
Didem
quarterly
0 - 200
Actual fig. :
Target fig.
Employee
evaluation
Filiz,
Joachim
quarterly
33 - 133
Actual fig. :
Target fig.
Strategy
review
Filiz,
Joachim
quarterly
33 - 133
13% Budgeted net P/L Actual net P/L

Hs+all
Hs.*25%+#other sysads + all
13% s*70%
others
Dept.Res.Use
d P/V/Pr :
13%
100% Res.sched.
#IT bucks
alphatesting :
0.25
IT P/V/Pr hrs
Average
evaluation 125% Average 3,0
4
Average
4
Amount own
signed offers
10%
42.298,67
of month
Signed offers
month /
written offers
10%
30% month
Act.days - last
MS/start :
10%
100% Proj.days
Amount
invoiced
sales of
10%
38.453,33
month
All
Proj.Res.Use
d P/V/Pr :
10%
100% Res.sched.
Signed offers
old cust.
month /
10%
35% written offers
Average
4
Average
4
quarterly
37
AGENDA

3/22/2010
38
RESTRUCTURING TEAM
Project Team
Project Owner
Top management and / or company owners
Steering Committee
Project owner, board, top management
Project Management / Project Office

BIC partner
Second internal project manager (senior manager) to be provided by client
Project office staffed by BIC and by client
Project Team
Members of client team from all relevant departments
BIC consultants experienced in restructuring projects and / or relevant workstreams
Senior managers and specialists from BIC Business Network, under management of BIC
project manager
Experts and interim managers from partner companies in BIC Partner Network, under
management of BIC project manager
3/22/2010
39
RESTRUCTURING TEAM
Project Approach
Key Success Factors
Involvement of all relevant parties
Deep and broad skillsets (expert knowledge) represented in project
Confidentiality
Speed and rigid decision and implementation process
Project Management Requirements
Deep understanding of all workstreams and project issues
Application of proven project management methodology
Project manager acts as initial decision maker for all relevant decisions
Project Office
Supports project during all project phases until project completion
Provides detailed, phase- and workstream-specific project plans, task lists and checklists
Supports project status reports, status meetings, reports to steering committee, etc.
Responsible for planning and followup of tasks, timeline, budget, project success
Responsible for formalized information gathering, documentation, distribution, central
point of communication
Managed by and reporting to project manager
3/22/2010
40
RESTRUCTURING TEAM
Project Tools
3/22/2010
41
Deep functional knowledge, especially in accounting, finance, and

restructuring
Hands-on-approach and significant management experience
Application of solutions according to international standards customized

for Turkish businesses
Comprehensive BIC Business Network and BIC Partner Network
Highly structured, proven restructuring project management approach
Commitment to speed and rigid decision and implementation process
Moderate fees and success-based fee component
3/22/2010
42
RESTRUCTURING TEAM
Why Restructuring with BIC?
BIC BEHRENDT INTERNATIONAL CONSULTING

Dr. Joachim Behrendt
Phone: +90 212 328 1939

Fax:
+90 212 328 1933
Email: bic@behrendt.com.tr
www.behrendt.com.tr
Blog.behrendt.com.tr

Restructuring Strategic Growth 18.03.10

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Restructuring Strategic Growth 18.03.10

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RESTRUCTURING FOR STRATEGIC GROWTH

Dr. Joachim Behrendt

Financial Crisis and World Recession A New Economic Environment

Restructuring for Strategic Growth

Financial Crisis and World Recession A New Economic Environment

Restructuring for Strategic Growth

FINANCIAL CRISIS & WORLD RECESSION

S&P 500 / FTSE 100 / Hang Seng

Source: FT / Thomson Reuters

Since first quarter of 2009, stock

FINANCIAL CRISIS & WORLD RECESSION

Gold / VIX / Employment

The VIX volatily index, Wall streets fear

Source: FT / Thomson Reuters / I-Spirit

Companies returned to profitability in

FINANCIAL CRISIS & WORLD RECESSION

Economic Outlook Europe

Restructuring for Strategic Growth

Restructuring for Strategic Growth

FINANCIAL CRISIS & WORLD RECESSION

A New Economic Environment Some Hypotheses

FINANCIAL CRISIS & WORLD RECESSION

Economic Indicators Turkey

Restructuring for Strategic Growth

FINANCIAL CRISIS & WORLD RECESSION

Key Indicator Forecasts (Turkey)

Restructuring for Strategic Growth

Financial Crisis and World Recession A New Economic Environment

Restructuring for Strategic Growth

Turkish Textile Industry

Source: DPT, Ekonomik Gelismeler, Eyll 2009

In 2008, the Turkish textile sector was

Implications for Textile Businesses

Restructuring for Strategic Growth

The Risk of Strategic Drift

Source: Johnson / Scholes, Exploring Corporate Strategy

Phase 4: Alternatively, demise of the organization

Restructuring for Strategic Growth

Zero-Base Approach to Strategy Development

Zero-based budgeting is a technique of planning and decision-making which

Question your products and services

Restructuring for Strategic Growth

Strategy Development Phases

Analysis of the environment: Opportunities and threats

Definition of the framework for strategic choice (scope of

Restructuring for Strategic Growth

Financial Crisis and World Recession A New Economic Environment

Restructuring for Strategic Growth

Strategic analysis is looking from

Example: Market research for

General Statistics by Markets

MMM Migros 2.000

Carrefour Express / Umraniye

Carrefour Express / Maltepe

Detailed Statistics by Stores

Restructuring for Strategic Growth

STRATEGIC ANALYSIS & OPTIONS

Analysis Example: Market Research Retail

STRATEGIC ANALYSIS & OPTIONS

SWOT Analysis Textile Industry

Inside-out view: Resources

Input costs, especially labour & energy

Price competition China / other

Geographical proximity to EU, Middle East