Recession Reverse The Strategic Choice

With the development of economy,the progress of technology and complication and dynamicity increasing in the business situation,all these factors are increasing the uncertainty and ambiguity for corporate strategy decision,and which lead more and more corporate to suffer the survival crisis for performance continual declining.In fact,many quality companies had experienced decline,only some had bankrupted,but others had got through and attained Nirvana.Turnaround strategy theory argues the destiny difference for those decline firms is depended on the turnaround strategies for them.Then,how to choose the turnaround strategy to change the destiny? Which factors have affected the corporate turnaround strategy choice? How are they affect it? Most especially,whether the turnaround patterns of Chinese companies are the same as the west corporate or not?There are three perspectives for turnaround strategy choice in turnaround theory: (1) Contingency Perspective.It assumes that the success for declining firms depends on the correctness of their turnaround strategies,and there many factors which can affect the strategy choice,but the decline causes and severity are the most important two factors.(2) Process Perspective.It assumes that the time and the order for turnaround strategies determine the success for corporate turnaround.It argues that there are two stages for corporate turnaround:declining stemming and rejuvenation. (3) Cognition Perspective.It assumes that the cognition of decision-makers affects the turnaround strategy choice.But,there many mutually contradictious conclusions based on these three perspectives,and far more important,they all belong to static strategy forming patterns,that is they assume that environment is certainty and the foresight of decision-makers is accurate.But clearly,it is variance with the facts of strategy decision in decline situation.Then,what contents do the turnaround strategies ought to include? And how to they form? Which perspective is appropriate?With the central subject that "turnaround strategies choice in declining firms", there are three principle research foci of this dissertation:(1) What is the fundamental logic of decline and turnaround?(2)What contents that the turnaround strategies should include?(3)How to choice the turnaround strategies? Or how to form the turnaround strategies?Based on Chinese listed companies,this study selects 110 samples in relate to standards to test relevant proposes.In data processing,SPSS16.0 and Ueinet6.0 software were used to verify hypothesis.After empirical and theoretical analysis,this study got some important results and conclusions as follows:1 The fundamental logic of decline and turnaround is that the decline is a trigger of turnaround and the turnaround is a kind of forced change.In the process of business running,all kinds of changes which from inside or outside of firms destroyed the fitness of corporate strategy,environment and resource. and produced all kinds of business problems when the corporate along the previously routine which leaded to the performance continuously decline and threatened the survival of the corporate.Facing survival crisis,corporate adopted various action to respond it.But those actions whether can achieve goals or not which depend on all kinds of subjective and objective factors.So,this study thinks the nature of decline is the hypothesis of current strategy is invalid,and it leaded the corporate to get into the "strategy drift";but the turnaround is a response of decline,and it aims at reducing and changing the gaps of status quo and ideal survival state.2 There are three classifications of turnaround strategies:CEO change, information disclosure and strategic innovationThe corporate is an aggregation of resource,and it's survival can't be without resource.But whether a corporate can free itself from the decline situation or not which depends on it's legitimacy in institutional environment and the efficiency in technological environment,The legitimacy represents the "qualification" of gaining survival resource for a corporate from the environment,and it is a "threshold" for the corporate survival.The efficiency indicates the "capacity" of gaining survival resource for a corporate from the environment,and it is a symbol of survival quality for a corporate.But the fitness between the corporate strategies and the environment is the precondition of gaining legitimacy and efficiency.In research,this study found that the turnaround strategies of declining firms surround the fitness,legitimacy and efficiency evolving:First,the corporate changes the frame of it's strategy through the action of CEO change,and it aims at promoting the fitness of the corporate strategies and the environment;(2) Second,the corporate affects the cognition of the key stakeholders about the corporate actions and foregrounds through managing and manipulating the information disclosure,and it aims at maintaining the legitimacy in the institutional environment;(3)Third,the corporate initiates all kinds of strategic innovation through adjusting and changing allocation patterns of corporate resource,and it aims at improving the efficiency in the technological environment.3 The corporate turnaround is a kind of crafting process which includes four parts:initial condition,initial strategy,process condition and evolution strategy.How to form the corporate strategies? Mintzberg proposed there are two basic patterns:deliberate pattern and emergent pattern.The deliberate pattern emphasizes the efficiency of strategy control,but the emergent pattern emphasizes the flexibility of strategy learning.So,the deliberate pattern is suitable for stable and predictable environment,and the emergent pattern is fit for quickly changing environment.But the realistic strategies forming needs to be efficiency and flexible simultaneously,it is as a craft man making a pottery.The strategy goal prescribes the mold of strategy,and it forces to decision-maker make the strategy by feedback and adjusting according to change of the situation.Mintzberg argued it is a crafting pattern,and it merges the think and action,control and learning,stability and change.So,the crafting pattern includes three basic characteristics:procedural rationality,path dependence and action-and-thought in one.In researching,this study found when a firm in decline situation,it is suffering specific surroundings:(1)environment uncertainty.The decline destroys the routine and strategy fitness,and mixes up the various causal relationship,and it causes the decision-maker can not choose the proper strategy accurately,so turnaround process is not linear,but evolve and reiterative.(2)resource scarcity.The nature of decline is the scarcity of the basic resource,and it limits a firm to choose correct strategies by a series of trial-and-error actions.(3)crisis urgent.The decline is a survival crisis of a firm,so the firm must take action to hold decline and recovery as soon as possible.It means that the firm needs to adopt the action which can improve the performance in a short time.But maybe those specific surroundings,which force the corporate turnaround to be a crafting process.It bases on the basic goal that is far from the decline situation and recovery performance,and selects the turnaround strategies according to the decline situation,but it also constantly adjusts the action according to the outcome of previous action and changing conditions.And this crafting process includes four parts: initial condition,initial strategy,process condition and evolving strategy.