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Financial Turnarounds: Preserving Value by William W. Sihler - Darden Graduate School of Business Administration University of Virginia, Henry A. Davis - Henry A. Davis & Co.

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Chapter 4. Comparison of Financial Turnarounds

The causes of financial difficulty are both external and internal. This study identified four principal external factors: business cycles, market shifts, hostile takeovers, and labor strikes. There are far more internal factors, as table 4.1 shows.

Table 4.1. Principal Causes of Financial Difficulty

External

  • Business cycles

  • Market shifts

  • Hostile takeover attempts/candidates

  • Labor strikes

Internal

  • General management capability

  • Poor or declining margins

  • Indecisiveness

  • Problems with acquisitions

  • Strategy

    • Need for critical mass and market share

    • Overexpansion

    • Overdiversification

    • Under investment

  • Marketing

    • Lack of customer/product focus

    • Lack of customer profitability analysis

    • Inappropriate pricing

    • Poor product quality

  • Financial ...

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