Prof. Metildah

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 63

A CASE STUDY OF THE CORPORATE TURNAROUND STRATEGIES

Wei-Hwa Pan

Department of Management

National Yunlin University of Science and Technology, Taiwan

[email protected]

Yih-Lang Chen*

Department of Food and Beverage Management

National Kaohsiung University of Hospitality and Tourism, Taiwan

Department of Management

National Yunlin University of Science and Technology, Taiwan

*(Corresponding Author) [email protected]

Abstract

This paper adopts a case study approach to identify the turnaround actions of a restaurant firm

that affect its capability to launch turnaround strategies when encountering different corporate

crisis contexts. The study ascertains key factors that could optimally be applied as a best prac-

tice framework for change management leading to corporate turnaround in a highly volatile

restaurant business.

Since turnaround strategies have not been pursued vigorously as a stream of research within

the hospitality industry, this approach would afford a framework for hospitality researchers to

commence similar future research processes, which in turn would help the industry cope with

turnaround.

Keywords: Corporate Turnaround, Entrepreneurship, Organizational Strategy, Restaurant In-

dustry, Strategic Turnaround.

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 64

Introduction

Company growth has continually been the

topic of concern for company founders and

operators and the core of management stud-

ies. For company organizations that continu-

ally seek growth, company growth becomes

particularly crucial when companies achieve

a stable profit and a leading status in the in-

dustry. On the other hand, companies that op-

erate in a volatile environment confront the

challenge of keeping pace with constant

changes in their external environment. While

companies that are able to respond the threats

they encounter in such environments are al-

lowed to remain still their competitive ad-

vantage, those that are not able to cope with

the environment either perish or face the in-

surmountable task of turnaround.

In this paper, we inquire into how the

unique characteristics of established a restau-

rant firm affect its ability to fulfill turnaround

strategies when facing two critical organiza-

tional crises. The topic of turnaround strate-

gies is of substantial interest not only for our

conceptual understanding but also for the

management of restaurant firms. Empirical

studies have long documented that hospital-

ity operators frequently encounter organiza-

tional crises and demonstrate a high rate of

firm failure (Elwood, & Tse, 1991; Ibrahim,

Soufani, & Lam, 2001; Tse, & Olsen, 1999;

Umbreit, 1996). A deeper comprehension of

turnaround strategies in this firm promises

improved organizational abilities to success-

fully employ such strategies.

This paper contributes to the emergent

research that argues against the simple appli-

cation of standard turnaround strategies to

hospitality-related businesses (Elwood, &

Tse, 1991; Hambrick, & Schecter, 1983; Tse,

& Olsen, 1999; Umbreit, 1996). Given the

limited prior research that directly connects

hospitality firm characteristics with the im-

plementation of turnaround strategies, we in-

vestigated realistic turnaround behavior in an

established restaurant firm that had been

faced two organizational crises. Based on an

iterative approach of data interpretation and

further data collection, we developed specific

propositions with respecting to how firm

characteristics influence the firms’ ability to

endure retrenchment, implement top-man-

agement change, and to draw on corporate

entrepreneurship. The propositions outlined

in this study contribute to the development of

more fine-grained models of strategic turna-

round in restaurant firms.

Literature Review

Definition of Corporate Turnaround

Typically, most turnaround situations

result not only owing to external factors but

also due to the incompetence and inexpertise

of the organizational management. Research-

ers have described turnaround as a multi-

stage process (Bibeault, 1982; Pearce and

Robbins, 1993). Bibeault (1982) indicates

that a firm’s primary objective of turnaround

is to prevent the downturn, which should be

followed by actions that either seek profita-

bility with changed resource commitment or

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 65

search new growth avenues. In other words,

these are long-term actions engaged by firms

that include investments aimed at motiving

financial improvements.

Bruton and Rubanik (1997) define turn-

around as ‘‘the reversal in a firm’s decline in

performance’’. Other definitions of turna-

round include those activities that support

firms in the regeneration of their businesses.

Schendel et al. (1976) introduced their con-

cept on the cause of the turnaround situation

and its effect on the selection of appropriate

turnaround strategies, while Hofer (1980)

stated the aspect of severity of the turnaround

situation and the selection of adequate turna-

round strategies. Hambrick and Schecter

(1983) empirically tested the notions asserted

by Schendel et al. (1976) and Hofer (1980).

Suzuki (1985) pointed out the types of strat-

egies involved in turnaround. These strategy

choices include:

(1) Top management replace-

ment.

(2) Financial strategy (inventory

control, liquidity management, debt

management and equity management).

(3) Personnel strategy (trimming

of workforce).

(4) Marketing strategy (product

and market diversification).

According to Bruton and Rubanik

(1997), generic rules that apply to a turna-

round situation include:

(1) A crises (as a motivator for

management to adopt necessary actions

to reverse the situation).

(2) Retrenchment effort (to con-

trol cash flows).

(3) Operating, strategic and/or a

mixture of the two (initiated after step

2).

(4) Corporate culture (shapes

turnaround strategy).

(5) Leadership

Influence Turnaround Factors

In the light of Sloma (1985), the factors

that influence turnaround can be categorized

into internal and external factors. External

factors are forces that affect the organization

from the external environment vis-a`-vis eco-

nomic problems, competitive problems, tech-

nological change and social change. There-

fore, Scherrer (2003) proposed external fac-

tors include increased competition, rapidly

changing technology and economic fluctua-

tions. While describing the stages in turna-

round, Scherrer asserts that the business

should be able to stabilize within 6 months to

1 year after implementation of the plan. Be-

sides, it should be able to return to growth

within 1 to 2 years after stabilization.

On the other hand, internal factors are

symptoms that firms show from within the

organization that can range from problems

such as inability to pay taxes and debt ser-

vices to eroding gross margin, decreasing ca-

pacity utilization, increased turnover of man-

agement and staff and lack of competence

and expertise to instruct the organization on

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 66

the part of top management. There are sev-

eral main internal factors of decline include

increasing inventory while sales growth de-

creases, cash flow problems and manage-

ment’s inability to cope up with growth.

Therefore, Allaire and Firsirotu (1985)

divided company crisis into current company

status and company’s ability to coordinate

with the future environment. When the time

given is limited during a crisis, decision mak-

ers must consider the degree of influence that

the crisis has on the company and adopt four

major reform strategies: reorientation, trans-

formation, turnaround, and revitalization.

These strategies are described as fol-

lows:

(1) Reorientation

Reorientation is the easiest one to ac-

complish among the four major strate-

gies. When performance is expected to

stagnate or decline as the current market

reaches maturity, corporations can

transfer a portion of their resources to

increasingly attractive markets or indus-

tries, take disciplinary action against

current business departments, or acquire

new business departments. This process

involves various business departments

or domains. However, experiences of

past success cannot necessarily be ap-

plied; corporations must adapt to differ-

ent cultures or organizational structures.

(2) Transformation

Transformation strategies must be ex-

ecuted by effective leaders who are will-

ing to fulfill company goals and spear-

head reform in corporations. However,

transformation strategies are typically

used during periods in which the com-

pany performs favorably. Therefore,

leaders who can develop goals to be

achieved in the future are necessary be-

cause these periods lack clear incentives

for reform.

(3) Turnaround

Corporations adopt turnaround,

which is the act of promoting substantial

reform over a considerable period, when

they encounter survival threats.

(4) Revitalization

Revitalization is when operating per-

formance, such as profitability and the

market share of the corporation, de-

clines without the occurrence of an im-

mediate crisis or when the operating

conditions of a corporation stabilize af-

ter turnaround. Strategy reform for

eliminating the causes of performance

decline must be executed during this pe-

riod to restore profitability and adjust

the direction of the corporation.

Consequently, Lee (1987) categorized

crisis response into three basic strategies: re-

duction, restructure, and growth. These three

basic strategies are also implemented in steps

together with periods of withdrawal,

strengthening, and progress during a com-

pany’s crisis response.

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 67

Company Background

Wowprime Corp was established by

President Day in 1990. Originally an amuse-

ment park business, it was subsequently

transformed into a chain restaurant.

Wowprime adopted a development method

similar to internal entrepreneurship in which

all executives at a level above store managers

and chefs are shareholders. On the other

hand, Wowprime is firmly anchored on three

ancient Chinese philosophers’ schools of

thought: Han Fei Zi’s Legalism, Laozi’s Tao-

ism and Confucianism. The firm president

credits their respective focus on discipline,

nonaction by the ruler (collective leadership)

and humanity (treating colleagues like family

members) for propelling the company’s rapid

expansion in the past decade.

Wowprime is a multi-brand operation

and owns 14 restaurant brands. Each brand

displays distinct product characteristics and

holds a certain consumer group position. The

services provided comprise Western-style

steaks, creative Washoku (Japanese cuisine),

grills, Hokkaido kelp pot, kaiseki cuisine,

teppanyaki, Japanese-style pork curry, and

vegetarian cuisine. In China, Wang Steak and

TASTy are in service with the addition of two

new brands to the China business group: the

teppanyaki restaurant, LAMU Teppanyaki,

and the kaiseki restaurant, Zen Cuisine. A to-

tal of 13 restaurant brands across the Taiwan

Strait provide these services. Thus,

Wowprime’s cross-strait expansion strategy

is to adopt regular chain operations instead of

developing franchisees to maintain service

quality. By 2013, a total of 359 restaurants

were in service, which comprised 273 restau-

rants in Taiwan and 86 restaurants in China.

Thus, there are ambitious growth plans un-

derpin the company’s listing, which will

make franchising overseas more transparent

and –accountable, thus, the firm intend to

raise its number of outlets and franchises to

1,000 by 2020 and 10,000 by 2030.

In addition to cross-strait international

layout development, Tokiya has been author-

ized by Mai Tan corporations in Thailand to

engage in brand operation in September

2011. Tokiya currently operates two stores

and is expected to open 20 branches before

2016. In 2012, Wowprime advanced into

China’s affordable catering market through a

joint venture with the Philippines’ largest

chain restaurant group, Jollibee Foods Cor-

poration, in which the 12Hotpot brand was

established. At the end of November 2013,

Wowprime agreed with Singapore’s Chinese

restaurant chain, Pu Tien Restaurant Pte Ltd,

to a joint venture that introduced

Wowprime’s vegetarian restaurant brand,

Sufood, into Singapore.

Research Method

Research Design

According to Yin (1994), case studies

are rich, empirical descriptions of particular

instances of a phenomenon, or underline the

rich, real-world context in which the phe-

nomena occur. Therefore, the primary notion

of employing a case study is to adopt cases as

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 68

the basis for developing theory inductively

(Eisenhardt and Graebner, 2007).

A case approach adopting content anal-

ysis of longitudinal data and information was

applied to explore and analyze the firm’s

turnaround strategies. This approach helps

look into the actions of the firm over time in

terms of the strategies that were used to de-

scribe the external and internal factors influ-

encing decline over the period. Case study

methods have been employed in studying

turnaround strategy over the past three dec-

ades (Schendel et al., 1976; Hofer, 1980;

Bruton and Rubanik, 1997; Chowdhurry,

2002). This provides the validity of case

study methods for documenting the turna-

round actions of firms. Likewise, it should be

emphasized that these studies were published

in top-tier management journals.

In this research plan, a longitudinal in-

terpretive and exploratory case study ap-

proach was used to develop its function of

theories construction (Eisenhardt, 1989; Yin,

1994; Eisenhardt and Graebner, 2007),

which was consistent with the process orien-

tation of the study. The Wowprime catering

company was chosen as the research subject

of this single-case study based on several

considerations. According to Yin (1994), the

selection of a single case can be based on the

whether the case is a well-formulated key

theoretical case, an extreme or unique case,

or a revelatory case. Analyzing such cases

can reveal special effects for further study in

the future (i.e., multicase studies).

Data Collection

We employed multiple approaches dur-

ing data collection to meet criteria for rust-

worthiness (Lincoln and Guba, 1985; Yin,

1994), including semi-structured interviews,

archival data, and observation. To acquire in-

formation on the actions taken by Wowprime

Corp, over 200 related articles from second-

ary sources, i.e., Business Weekly, company

websites as well as databases such as ABI-

Inform were scrutinized. These actions were

then compared to the operating turnaround

measures and strategic turnaround measures

in order to evaluate objectively whether this

firm’s moves resembled turnaround strate-

gies.

Data Analysis

We used MAX.Qualitative Data Analy-

sis software (MAXQDA) (Kuckartz, 2001)

to content analyze the interview transcripts to

find out patterns, core consistencies, and im-

plications related to turnaround activities.

The analyses generated a set of themes and

clusters of thoughts and phrases that had

been expressed by several of the respondents,

not just by one or two individuals. We pro-

gressed this set of themes further over a pe-

riod of several months into the model of turn-

around strategy introduced in this paper. Fi-

nally, we shared our results with the top-

management teams of the firm and incorpo-

rated their feedback.

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 69

Discussion

Antecedents of the First Turnaround

Wowprime originated through the oper-

ation of an amusement park business, which

quickly gained profit through the creation of

an ostrich-riding South African theme park in

1990. Immediately, three new theme parks

emphasizing novel experiences were succes-

sively established within half a year. How-

ever, revenue quickly decreased because of a

lack of control over the fickle interests of do-

mestic (Taiwan) citizens.

Subsequently, Wowprime established

an all-you-can-eat National Steak House in

1993. However, a lack of understanding of

the restaurant business resulted in financial

losses, which subsequently caused the restau-

rant to rapidly lose business. In November of

the same year, Wang Steak, an up-scale steak

restaurant was established under the largest

corporation in Taiwan: Formosa Plastics

Group. Adopting the marketing practice of

applying unique private guest house receipts

and serving Chinese-style well-done steaks

created new business opportunities for

Wowprime.

Upon market stabilization and succes-

sive branching, Wowprime further devel-

oped five major business areas including

Mongolian Whole Sheep Barbecue, No. 1

Zongzi, the Guinness World Records Mu-

seum, and former theme parks. Thus,

Wowprime has become a multibusiness

group involved in the catering, leisure, and

recreation business industries.

However, industrial hollowing occurred

after a series of events including an economic

crisis in 1997, known as the Asian financial

crisis, reduced consumer intentions caused

by the 1999 921 earthquake that produced a

7.3 on the Richter scale, and accelerated out-

flow from Taiwanese manufacturers to China

that began in 2000. This domino effect nega-

tively affected economic growth, which was

the first time this had occurred over the pre-

vious 30 years in Taiwan. The catering indus-

try, which has traditionally been considered

as a domestic demand industry, was also in-

evitably influenced by this negative effect on

the economy. Consequently, Wowprime’s

overall revenue between 2000 and 2001 de-

creased by 25%. In 2000, Wang Steak, which

persisted in the high-priced business market,

was forced to consecutively close three

branches and layoff 50 staff members; em-

ployees throughout the company were un-

easy during this period.

Turnaround Process

Under unstable operating conditions

caused by simultaneously managing com-

pound diversified businesses, Wowprime’s

executives made the following decisions re-

garding the future direction of the company:

(1) Retain the currently profitable

vertical brand extension strategy in

multibusiness operations (i.e., retain the

individual operation of the low-priced

No. 1 Zongzi restaurant and high-priced

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 70

Wang Steak establishment).

(2) Eliminate the relatively less

profitable brands and retain the thriving

Wang Steak brand as the brand exten-

sion strategy (focused cultivation).

Through debates and discussions in the

company’s “Central Standing Committee”

(an imitation of the Kuomingtang’s highest

decision-making mechanism, which com-

prises high-level group executives above the

level of directors who form a collective lead-

ership system and serve as the company’s de-

cision-making center), a final resolution was

established, which was to retain the brand

that demonstrated optimal performance and

the greatest prospective profit, Wang Steak,

and quickly close and sell the other four still-

profiting business bodies within a year. The

entire corporation cut back and concentrated

on Wang Steak operations by immediately

conducting a series of thorough and in-depth

standardized operations in which McDon-

ald’s efficient training structure and The Lan-

dis’s (domestically renowned for their high-

quality services) unique service philosophy

was fully imported.

Thus, the storefronts were divided into

six sections, which comprised scheduling,

training, maintenance, ordering, reception,

and administration. Additionally, Wang

Steak has an internal culinary department,

which is absent at the McDonald’s Corpora-

tion. Conducting focused operations enabled

Wang Steak to stay quiet and make adjust-

ments without opening additional restaurants

for over a year. Consequently, from the orig-

inal seven restaurants established in the

struggle for expansion, Wang Steak suddenly

expanded to 14 branches. This enabled

Wowprime to establish an unreachable lead-

ing status in the industry of domestic high-

priced steak restaurant chains.

Turnaround Analysis and

Propositions

Since the company was established,

Wowprime has adopted compound diversifi-

cation operations by combining the amuse-

ment park business with the catering indus-

try. Upon the formation of a diversified busi-

ness body, Wowprime ceased to encounter

the strategic competitiveness problem faced

by single companies, and instead pursued the

overall comprehensive performance of a

group operation within each business body.

Therefore, diversified companies must

plan various aspects of establishments and

extensions including resource distribution,

future development directions, and core com-

petitiveness from the company perspective as

a whole instead of simply opportunistically

seek and identify solutions.

The initial development of Wowprime

involved continual setbacks because of inef-

fective strategies, maladministration, im-

proper resource configuration, as well as the

lack of and inability to establish core compe-

tences in a timely manner. Therefore, if di-

versified operation is to be adopted in com-

pany strategies, the resource distribution and

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 71

comprehensive performance coordination

and creation between business units must

first be determined. In addition, coordination

with the original group constitution and stra-

tegic requirements must be considered prior

to choosing and developing new businesses.

Therefore, through group decisions, the

company decided to focus on a single restau-

rant brand in the company expansion strat-

egy. Organization resources were compiled,

the process of establishing core competence

began, and irrelevant business bodies were

eliminated within a year. Moreover,

Wowprime could no longer solely rely on op-

portunistic wealth for its long-term survival

and instead had to depend on a set of feasible

chain replication operation models (core

competence) to maintain profits and establish

a competitive edge. Thus, McDonald’s train-

ing, grouping, and operation structures and

The Landis’s service concept were intro-

duced to achieve “backend process industri-

alization and frontend service customeriza-

tion.” This has substantially increased cater-

ing quality, customer satisfaction, and opera-

tional efficiencies. Moreover, prior limita-

tions on up-scale steakhouse store counts

have been overcome, which followed the

sudden expansion to the highest number of

high-priced steakhouses in Taiwan.

Proposition 1-a: When the company encoun-

ters drastic changes in external opera-

tion environments that result in poor

internal profits and operation crises,

reform strategies must be immediately

executed to restore operational perfor-

mance and make a fresh start.

Proposition 1-b: Company operational re-

form strategies must implement the

necessary control and reduction of

company assets and overhead costs be-

fore pursuing increased revenue.

Antecedents of the Second

Turnaround

Ninety-nine percent of approximately

100,000 restaurants registered in Taiwan

have turnovers below NT$100 million. These

restaurants primarily belong to small and me-

dium corporations or common micro-entre-

preneurships. Notable restaurants operate un-

der famous regional or local brands. From the

market perspective, various domestic cater-

ing patterns are readily available; thus, alter-

natives can be easily selected. Additionally,

other retails and retailers (i.e., convenience

stores, wholesale stores, and superstores)

successively provide cooked food and ready-

to-eat food products (e.g., microwave meals

and meal packs). The successive entrance of

these businesses divided the market and

caused intense competition within the restau-

rant market. This caused a common effect in

the industrial environment to occur, in which

entrance requirements are low and employee

turnover rate is high.

After a total transformation was

achieved after a year of focusing on restau-

rant businesses, Wowprime established oper-

ation models of restaurant management and

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 72

systems. In addition to the gradually satu-

rated domestic high-priced steak market, the

operation risks and future development

against intense domestic competition and

various possible considerations such as up-

flowing internal talents have become chal-

lenges that the company must consider exten-

sively.

Turnaround Process

The process of retaining talents and in-

creasing the internal strength of the company

while expanding external development led

President Day to recollect the qualities of the

Cantonese dragon dance, which features

uniquely styled dragons dancing on a stage

that attracts the attention of the crowd and

motivates the dancers through cheers. This

type of motivation can be observed in the

field of business and results in a company’s

external growth and staff members’ internal

entrepreneurship. In 2001, the Lion Dance

Project was promoted to implement

Wowprime’s new internal entrepreneurship

plan.

In this plan, the president identifies tal-

ents with entrepreneur qualities and charac-

teristics in the group and provides them with

a business stage on which to develop their

own restaurants. Moreover, multibrand ex-

pansion is supported by the company’s inter-

nal resources. Thus, the core concept of the

Lion Dance Project is to continually replicate

success experiences achieved by the brand

and the operation of Wang Steak and adopt

the multibrand direction. In summary, all

staff members in the Wowprime group have

the opportunity to become the company’s

shareholder; through the Lion Dance Project,

everyone has the opportunity to engage in in-

ternal entrepreneurship in this group.

Vice President Chen, who exhibited the

most courage and enthusiasm as an entrepre-

neur, became the group pioneer who created

the mid-scale Western steak establishment,

TASTy, and became the first lion king to suc-

ceed in entrepreneurship. The following

year, General Manager Wang, who managed

the company’s staff department operations,

established Tokiya, which is primarily based

on creative Japanese cuisine. Within the

same year, another general manager, Lee,

traveled to the United States and established

Porterhouse Bistro in Beverly Hills and initi-

ated overseas business on behalf of

Wowprime. In 2003, Vice President Chen es-

tablished Wang Steak in China by success-

fully opening the first restaurant in Shanghai.

The encouragement of domestic and in-

ternational entrepreneurship success pro-

vided by the first-generation lion kings

prompted the company to proceed with the

second phase of the brand placement process.

In 2004, General Manager Tsao established

Yakiyan, which features table grill. Subse-

quently, Giguo, a Hokkaido kelp pot restau-

rant, was established by General Manager

Lee, who already had entrepreneurial experi-

ence. In the following year, General Manager

Wang introduced ikki, which offers creative

Japanese kaiseki cuisine. In the same year,

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 73

Chief Financial Officer Yang, who had an ac-

counting background, successfully estab-

lished the Chamonix, a teppanyaki restaurant

based on the demand for a romantic French

setting.

Encouraged by the Lion Dance Project,

Wowprime expects two new innovative pat-

terned restaurant brands to be introduced

within 2 years. Through this plan, new lion

kings (new brands) and lion king candidates

(determined by the president; a year is re-

quired to plan a new brand) will successively

emerge every year.

Turnaround Analysis and

Propositions

In the turnaround scenario, Wowprime

adopted the Lion Dance Project’s turnaround

strategy. The characteristics of the project are

multibrand derived product differentiation,

market segmentation, and company growth

strategies integrated with the internal entre-

preneurship system. Thus, Wowprime

adopted entrepreneurial oriented strategies

focused on reorienting the product market

and increasing revenue.

The actual processes conducted in the

Lion Dance Project involved the chairman

selecting the company’s most capable entre-

preneur and the most courageous staff mem-

bers who would dare to produce innovations

to create new restaurant brands and engage in

restaurant expansion. The company head-

quarters provides support in operation man-

agement including production, sales, human

resources, research and development, and fi-

nance. Additionally, tacit knowledge is trans-

ferred and learning curve effectiveness is en-

hanced through cross-holding, collective de-

cision making, and the sharing of experi-

ences with branch expansion among various

branches. This increases the company’s

economies of scale and expands the econo-

mies of scope of the operation types.

In summary, this is a strategy in which

entrepreneurship opportunities are increased

during the entrepreneurship process. Addi-

tionally, financial and management operation

risks are minimized and prevented to achieve

the up-flow of various levels of internal staff

members and external lateral expansion to in-

crease the number of additional startup busi-

nesses.

Proposition 2-a: Strategic turnaround strat-

egies must focus on reorienting the

company’s product market, developing

niche markets, and integrating internal

resources for maximal utilize.

Proposition 2-b: Strategic turnaround strat-

egies can be combined with the com-

pany’s internal entrepreneurship system

and become an entrepreneurial-oriented

strategy.

Strategic Implications for Both

Turnarounds

Wowprime’s reform response strategy

was inspected and verified in this study. In

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 74

summary, the two response strategies en-

countered by Wowprime verified Allaire’s

(1985) results. Based on current conditions

and the degree of coordination in future en-

vironments, decision makers must determine

the degree of influence that company crises

exert on the organization during urgent

times. Table 1. describes the four major re-

form strategies of reorientation, transfor-

mation, turnaround, and revitalization and

the corresponding strategies used by

Wowprime.

Additionally, the results of this case

study agreed with those of Lee (1987), in

which crisis response strategies were divided

into the three basic strategies of reduction

(discard useless portions and keep essential

portions), restructuring (focused operation

and internal entrepreneurship), and growth

(multibrand, multiproduct, and multimarket).

The steps executed in these strategies also

conformed to and coordinated with the three

processes (i.e., withdrawal, strengthening,

and progress) executed in crisis response.

Proposition 3-a: During crisis response, the

company can execute responses to

changes in crisis during the with-

drawal, strengthening, and progress

periods.

Proposition 3-b: During the strategic pro-

cess of crisis response, the company

can respond to changes in crisis during

the three strategic-reform periods of

reduction, restructuring, and growth.

Corporation bodies are not solely man-

agement units but centers of resource pool-

ing. The resource distribution and application

timing are decided through management

strategies. If firm executives can adopt suita-

ble strategies, corporation resources can be

fully used to initiate corporate growth. Thus,

support for corporate growth can be provided

by managers who wish to fully use the com-

pany’s current resources to enhance organi-

zational performance. Furthermore, strategic

choices and changes can reflect the develop-

ment of an organization over time. Managers

who consider the limitations of the existing

business scope or are motivated by various

strategic intentions choose specific strategies

to sustain corporate growth.

Proposition 4: The leadership pattern and

style of the company’s entrepreneurs can be

adjusted in accordance with differences in

companies’ organizational process.

Conclusion

Based on the aforementioned research

results, the following conclusion and recom-

mendations (consisting of three points de-

rived from the implications of practical oper-

ations) are proposed.

First, a standard model for new prod-

ucts and market operations should be estab-

lished as a basis for replicating brands by

systemizing and establishing ability and ex-

perience transfer mechanisms. In addition,

various standard operating procedures in-

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 75

volving the use of the most suitable operat-

ing methods, determined through the expan-

sion process, should be established as a ba-

sis for future internationalization. Before the

domestic market becomes saturated, over-

seas markets and internationalization pro-

cesses should be planned and platforms

should be simultaneously provided to core

executive members for enhancing future

Table 1. Key reform strategies and the corresponding strategies in the Case Study

Reform strat- egy

Status Characteristics

1. Pro- gressive change

Harmony, consistency

� Organizational strategy matches the current environment and can be used to predict future environmental changes.

2. Tempo- rary change

Temporary imbalance

� Organizational strategy cannot match the current environment, which causes a tempo- rary decrease in performance level. However, the strategy adopted by the organization matches future environmental changes, and current environmental changes are temporary when organizations do not require to make substantial changes to their current strategic directions.

3. Trans- formation or reorien- tation

Transfor- mation or re- orientation

� Organizational strategy matches the current environment and provides satisfactory perfor- mance, but the organization predicts drastic changes in future environments (i.e., fluctuat- ing competition in the international and do- mestic catering industry, deregulation in China). Organizations quickly respond to envi- ronmental changes to maintain a competitive edge and sustain growth. � Wowprime case: Organizational strategy based on various operation models or the transfer of portions of company resources to attractive target markets or industries.

4. Revital- ization and turna- round

Turnaround, revitalization

� Organizational strategy cannot match the current environment and performance (perfor- mance declines) and cannot be used to coordi- nate future environmental changes. A lack of immediate improvement can result in survival crisis. Thus, the organization must adopt timely response actions to prevent further de- terioration and reverse situations. � Wowprime case: The Lion Dance Project turnaround strategy.

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 76

prospects and realizing personal goals. This

can increase the input of organizational com-

mitments. Moreover, the leadership pattern

and style of company entrepreneurs can be

adjusted in accordance with the varying or-

ganizational process of companies.

This study was limited to partial subjec-

tive classification for the growth period of an

individual corporation, and limited by the in-

ability to gain insight into the actual deci-

sion-making process of firm executives.

Nevertheless, the study provided the follow-

ing contributions: In addition to integrating

the currently constructing theory of the entre-

preneurial process and determining the vari-

ous resources required in specific growth pe-

riods of the corporation, the results of this

study expanded the research on organiza-

tional growth, which primarily concerns the

evolution of firm capabilities.

Second, we followed Ahuja and Lam-

pert (2001) introduced their suggestion and

disregarded positivistic research programs

(i.e., causality is determined using variables

and hypothesis verification). By contrast, a

historical review and analysis explanation

from an overall perspective was conducted to

investigate mutual relationships between so-

cial contexts and corporation actions taken

by corporations during strategy changing

processes. Regarding management implica-

tions, this study confirmed and further em-

phasized the long-valued corporation unique-

ness of corporations in the strategic field.

This revealed strategies adopted by corpora-

tion organizations, on which the in-depth in-

fluences were influenced by factors such as

operational background, historical tracks,

company resources, and strategic intentions.

Therefore, strategic growth is also path de-

pendent and reflected to a certain degree by

the company’s various strategic development

tracks.

Third, relevant directions for future

studies are recommended as follows.

First, Ahuja and Lampert (2001) proposed

that procedural studies can be summarized

based on three methods: procedures can be

considered as (a) causal relationships be-

tween variables; (b) personal or organiza-

tional conceptual scopes; and (c) a historical

record describing changes caused by certain

events. As presented in this study, the third

method allowed enabled researchers to di-

rectly and entirely describe changing pro-

cesses of that occur during events. However,

relevant studies are scarce and, therefore, un-

warranted, which awaits scholarly commit-

ments.

Second, this study adopted a procedural per-

spective and qualitative methods to investi-

gate topics concerning corporate growth and

strategy change. However, researchers must

understand that the variation theory remains

crucial in the study of management. Thus, the

causal relationship between development and

measures of corporate growth variables (i.e.,

using independent variables such as opera-

tional background, organization

The International Journal of Organizational Innovation Vol 7 Num 2 October 2014 77

paths, resource requirements, and strategic

intentions as causes and dependent variables

such as strategic choices and changes as ef-

fects) remains a viable research direction.

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