Context: Italian company operating in the electronics and subcontracting sector. Revenue of 8 million Euros and 80 employees.
Problem
- Revenue decrease during the past three years.
- Lack of company's reorganization.
- Profitability loss connected to:
- Incorrect placement of the company on the target market.
- Type of products sold.
- Very tense financial position of the company.
- Difficulty in obtaining financing from credit institutions.
- Great internal conflicts.
- Mishandled trade union relationships.
- Position of partners/administrators at procedural risk.
Main causes of the problem
- The company has not progressively focussed on its core business, opening and investing on unprofitable product lines.
- The company’s strategy, not supported by an adequate management control, has caused severe losses.
- The roles and responsibilities of partners, advisors, and management seem to be poorly defined.
Suggested solution
- Presence in the company of a Temporary manager acting as General Manager.
- Study and draft of the company’s budget, divided into sales, purchase of raw materials, personnel costs, investment budgets
- Study of causes of low marginality.
- Analysis of profitability according to product types.
- Reassessment of the company’s strengthening strategy, and closure of unprofitable production lines.
- Draft of a preventive continuity agreement.
- Re-establishment of trade-union relationships also for the purpose of the “good reputation” of the Temporary Manager/s with the parties in question.
Timing
10 months
Results achieved
- Newly positive gross operating margin.
- Optimization of existing organization.
- Definition of three-year Business Plan and Budget.
- Arrangement of management control with monthly reports.
- Re-establishment of a “good company climate”.
- Re-activation of relationships with Suppliers and banks.
- The approval of the preventive continuity agreement obtained in 7 months.