Restructuring Strategies For Changing Corporate Focus Essay

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Restructuring strategies that change corporate focus is a set of strategies, which lead to considerably different level of business scope and relatedness in the corporate portfolio over time (Zhao, Michalisin, & Stubbart, 2011). TABLE 2: STRATEGIES FOR CHANGING CORPORATE FOCUS (Zhao et al., 2011) Strategic Changes in Business Relatedness Higher Relatedness Lower Relatedness Strategic Changes in Business Scope Broader Scope Core Expansion Diversifying Narrower Scope Complete Refocusing Down scoping There are four restructuring strategies that companies often use: Diversifying A diversification strategy broadens the scope of the company 's portfolio and reduces the interdependencies among businesses (Oliver, 1975). A research illustrated that diversified firms can achieve higher levels of profits and more rapid growth than specialized firms because of market power (Collis, Montgomery, & Montgomery, 1997). Some studies found a positive relationship between diversification and firm performance while others have found no relationship or a negative relationship (Zhao et al., 2011). So it is hard to define whether the diversification strategy could improve the issue of a company. Therefore, there is not sufficiently realistic evidence to support diversification as an efficient strategy. Core Expansion Core expansion changes corporate focus by increasing the proportion of related-businesses in the corporate portfolio (Zhao et al., 2011). Core expansion usually use two ways to

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