Corporate Restructuring

3366 Words14 Pages
Corporate Restructuring:
Corporate restructuring is one of the most complex and fundamental phenomena that management confronts. Each company has two opposite strategies from which to choose: to diversify or to refocus on its core business. While diversifying represents the expansion of corporate activities, refocus characterizes a concentration on its core business. From this perspective, corporate restructuring is reduction in diversification.
Corporate restructuring is an episodic exercise, not related to investments in new plant and machinery which involve a significant change in one or more of the following * Pattern of ownership and control * Composition of liability * Asset mix of the firm.
It is a comprehensive
…show more content…
Staff reductions are often accomplished partly through the selling or closing of unprofitable portions of the company and partly by consolidating or outsourcing parts of the company that perform redundant functions (such as payroll, human resources, and training) left over from old acquisitions that were never fully integrated into the parent organization.
Other characteristics of restructuring can include: 1. To improve the company’s Balance sheet, (by selling unprofitable division from its core business). 2. To accomplish staff reduction ( by selling/closing of unprofitable portion). 3. Changes in corporate management. 4. Sale of underutilized assets, such as patents/brands. 5. Outsourcing of operations such as payroll and technical support to a more efficient 3rd party. 6. Moving of operations such as manufacturing to lower-cost locations. 7. Reorganization of functions such as sales, marketing, & distribution. 8. Renegotiation of labor contracts to reduce overhead. 9. Refinancing of corporate debt to reduce interest payments. 10. A major public relations campaign to reposition the company with consumers.

Objectives of Corporate Restructuring
Restructuring means “to give a new structure to rebuild or rearrange the business for increased efficiency and profitability which is the main purpose of the entire business establishment. The meaning of the word is quit wide, depending on the
Get Access