Stage 6: Detailed Diagnosis

Stage 6: Detailed Diagnosis

The detailed diagnosis explores the deeper causes of financial distress. Understanding root causes is needed for creating lasting solutions.

There are two dimensions to consider in the detailed diagnosis:*

  • Internal vs. external – Does the cause arise from forces inside or outside the organization?
  • Economic/technical vs. political – Are political or technical issues behind distress? 

These two dimensions translate into four categories of potential causes. Examples of deeper causes are available in each category. Use these examples to determine what causes of financial distress might apply to your organization and then use those to develop customized solutions to financial distress. Step 8 of the recovery process provides examples of solutions that correspond to the causes. 

  Internal External
Political Category 1 Category 3
Economic/Technical Category 2 Category 4





Jump ahead to Stage 7: Recovery Plan

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* Charles H. Levine, “Organizational Decline and Cutback Management,” Public Administration Review, July-August 1978, pp. 316-325.