CM Lecture 2

Management > Crisis Management > 3 perspectives > Interdependence of the 3 models > Crisis and learning > Slatter's recovery

Slatter's recovery

Stuart Slatter (1984) wrote on Corporate Recovery, conducting a study using a small sample from purely UK firms over a 15 year period. He observed patterns, which suggested that there were common causes of crises. These were:

Inadequate Financial control, such as lack of control of accounting and pricing - 75%
Poor Management, including no information to deal with the situation and no SOPs. There was often a lack of communication and identification of the issue - 73%
Affects of competition. While today there is no excuse, back in the early 1980s firms sometimes had poor ways of effectively monitoring competition - 40%
High cost firm structure, such as the oil hike in 1972, which had a massive effect on organisations - 35%
Changes in market demand, which should be well known by firms, but in the 1980s many UK firms were quite inward-looking - 33%
Change in commodity prices - 30%
Failure in marketing - 22%
Poor financial policies - 20%
Big project - 17%
Acquisitions - 15%

All causes overlap each other, which is why it is imperative that firms need to structure the commonalities of the problems and resulting solutions.

There are some issues over the reliability of Slatter's work, including the narrow sample, meaning that he did not mention how culture can cause or prevent a crisis. In the 1980s organisations experienced numerous crises and 3/4 went out of business. However, in the US the regulatory systems, which are not present in the UK, would have prevented many firms from collapsing. Slatter's sample is just too small to gain any good information.

Meyer's 9 causes of failure

Hoffman's turnaround strategies

Discussion

Invulnerability Syndrome