Exhibit 14 presented the successful turnaround of ISH GmbH. Identify another company in the business press that you believe to be in the turnaround process. Based on Exhibit 13, which stages has it entered and what have managers chosen to do in those stages? What stages remain? What do you think are the key challenges facing management in returning this firm to normalcy?

Exhibit 14

Exhibit 13

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How exactly would you implement the turnaround steps shown in Exhibit 13? Here we illustrate the turnaround process for ISH GmbH, one of Europe's largest and most successful cable companies. Formerly part of Deutsche Telekom, in April 2002 this supplier of cable services to approximately four million homes in the German state of North Rhine Westphalia (NRW) was in a state of total business failure-bleeding cash, losing money, and in default on nearly 2.7 billion (e is the symbol for euros) in debt. This is the story of ISH's resurrection from the organizational graveyard. Stage 1: Changing Management In April 2002, ISH's management brought in the strategy-consulting and tumaround firm AlixPartners to help it analyze its books and cash flow. AlixPartners is a professional turnaround firm recently credited with profit improve- ment at beleaguered Kmart. Nearly 120 days later, ISH shareholders appointed Jim Bonsall to fill the role of CEO. Bonsall is a principal with AlixPartners and has 25 years of experience working with European and multinational public and private companies. Stage 2: Situation Analysis Ironically, when Alix Partners was brought in, ISH management was completely unaware of the depth of the firm's problems. Although this may sound surprising, a management team may lose track of the need for change when its members are too heavily invested in the status quo. Initial analyses revealed that, although the firm had recorded current liabilities of 7 million, the actual number was 500 million! Management was also unaware that ISH was in default on many of its secured-debt facilities. These amounted to nearly 2.5 billion; thus, its total liabilities were approximately 3 billion. Stage 3: Emergency Action The complexities of Germany's insolvency code nearly always result in the total liquidation of a firm's assets. Once difficulties are discovered, a troubled firm has 21 days to resolve relationships with creditors prior to being declared insolvent. To take advantage of this three-week window of opportunity, AlixPartners worked quickly to gain 120 days of additional short-term bank financing and assigned teams of AlixPartners professionals to ISH's 17 largest vendors. Tearns met weekly, and the objective was to educate bankers and vendors on the balance sheet and operating strengths of ISH while preventing a premature declaration of insolvency. By the end of the 120-day period, not only had insolvency been avoided, but the firm had reached agreement among the major creditors on an operating plan for going forward. Stage 4: Restructuring ISH Shareholders officially appointed Bonsall as CEO of ISH in late 2002. However, restructuring had actually started in the emergency-action stage in April of that year. Bonsall's early agenda for his tenure as CEO included establishing core organizational values, improving the company's image, solving problems using a team approach, and achieving profitability and industry leadership. He sought to do this by institutionalizing a balanced-scorecard system and tying a reward system to it that supported his objective of transforming the firm into a customer- and data-driven organiza- tion. Bonsall achieved these objectives the hard way: by achieving results and restoring trust and confidence in the company's goals. One of the biggest early restructuring tasks was to reorient ISH away from the Internet and back to its cable-television business. The company had put the vast majority of its time, money, and effort on building up its Internet subscriber base and had only 5,000 Internet subscribers to show for these efforts (versus its core, but neglected, resource of 4 million cable subscribers). Stage 5: Normalcy and ISH's Return to Industry Leadership Bonsall's management team agreed that the best way to grow the cable business would be to offer more selection and technical innovation through a digital-program offering in the key cities of Cologne, Dsseldorf, Bochum, and Neuss. All this would have to be achieved in the first year following the restructuring, starting in December 2003. ISH overcame numerous institutional and technical complications to achieve the digitalization objectives. Signs that the ISH turnaround was succeeding was the fact that by January 2004, cable outages had become a thing of the past and customer satisfaction was increasing. ISH saw itself as a company that provided its four million customers with entertainment. Soon, the company would launch a showcase with up to 50 additional channels and Near Video on Demand. Bonsall expected a standard offering for the whole of Germany to be marketed jointly by all cable regions. ISH continued to offer high-speed Internet-with download speeds of 2 MB and upload speeds of 512 KB, leaving the competition behind in the residential customer segment.