Business strategy and turnaround

Rising costs... aging plant and equipment... increased competition... customers defecting...

Throughout the 1980s, this major government department transport operator was in a down-spiral. Business strategies for turnaround and survival were required.

By 1996, however, it had become a profitable, listed company.

Heading the turnaround team were Francis Small (as Managing Director) and Murray King (as Executive Manager Corporate Services).

Francis Small: "Selecting the right strategies and executing them well was critical to success. So too, however, was phasing our productivity improvement initiatives and managing the stakeholder relationships.

"The productivity improvements were enormous and underpinned all the other benefits that flowed through to the economy, stakeholders and customers..."

Principal change methods employed:

• Organisation restructuring and privatisation
• Business process re-engineering
• Staff downsizing (80%) and incentivisation
• Cultural change
• Investment and market-led growth strategies

Results:

• Major productivity improvement (700% on key measure)
• Operating profit 1999 – 2000 NZ $71m (net profit NZ$47m)
• Transport prices halved in real terms.

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