MGT5STR - Strategic Management
ASSIGNMENT 2
“Critically explain the three forms of restructure. In your answer detail why firms restructure, giving a comprehensive example for each form.
Provide an explanation of the errors firms should avoid when restructuring. You should include references to current strategic management academic journals and examples of competing firms.”
What is restructuring?
Restructuring is a process for corporate companies where in there are changes made in ownership, alliances, business mix and asset mix to make sure that the shareholders’ value is enhanced to the maximum. In today’s world, restructuring has become one largest processes that a company follows. Companies are competing with each other in to
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Induce Higher Earnings: The basic goals of a corporate restructuring include higher earnings and the creation of a corporate brand name / value. The brand name of a corporation is largely affected by the corporation’s ability to generate enough cash.
Provide proactive Leadership: The style of the management influences the restructuring process in a great manner. The successful companies have clearly displayed their ability in great leadership styles in which a manager can related on a one-to-one basis with his employees.
Leverage core competency: As the concept of organizational learning is gaining momentum, corporations are highly concentrating on exploiting the rise on the learning curve. This process can take place only when the corporations focus on their core competencies. This is also considered as the best way to provide the shareholders’ with increased profits.
Ensure clarity in vision, strategy and structure: Corporate restructuring needs to focus on the concepts of vision, strategy and structure. Corporations need to be very distinct about their goals and the ambitions that they plan to achieve. A major emphasis needs to also be made on issues such as time the frame and the means that influence their success.
Empowerment of Employees: Empowerment or handing over power is a major part of any restructuring process. Delegation of work and decentralized decision making provides corporations with effective
In many ways, empowerment embodies principles effective managers and leaders have practiced for years. Two new driving forces in business, increased diversity and high-speed change, magnify the need for empowerment. Empowering people is now indispensable for effective personal productivity and maximum team success.
Roterra has always managed change in a director image of change fashion that enables the owners to have 100% control over their circumstances and they have always been successful. Revitalization is the transformation change phase that has allowed the company to grow (Palmer, et al., 2009). This is no longer the case. In 2008, when the oil prices fell, the company
The relationship between an organization’s strategy and structure are extremely important because it “directly impacts a firm’s performance” (Rothaermel, 2013, p. 309). Also, as an organization grows, it should reevaluate the current strategy and structure to ensure that it remains the optimal choice for the organization (Rothaermel, 2013). The four types of organizational structures, listed in order of least to most complex according to Rothaermel (2013), are: (1) simple, (2)
A business needs to focus on its business and compete smartly from my perspective. This will include process improvements (change) but change that is meaningful to keeping the business alive, functioning, and growing as it achieves its mission. I worked for 2 family run businesses and watched as the children took over, tried to do what “everyone else is doing”, and failed the business.
Corporate reorganization is definitely an available option. The company should be structured as a parent-subsidiary controlled group. The restructuring should be performed in conformance to any and all tax-saving codes and provisions.
The single most important component associated with managing a successful organization, entails the empowerment of employees. People that are empowered are able to make smart decisions without always having to rely on authority, to point them in the right direction. Creating an empowered organization involves interest in the workplace; minimal absence from work, high retention rates; loyal and motivated team members; as well as efficient results and effective communication amongst team members. In the book, The Wonderful Wizard of Oz
While it was foreseen that the company would initially take financial setbacks because of the reorganization, it was not believed that the financial risks would be drastic. However, the impending report that Mr. Elesser has to present to the board will detail a net income that will be nearly 26 million dollars in the red for 2004 (see exhibit 2)3. The blunt force restructuring met resistance on numerous fronts. First of all, the various components of the company did not operate under the same uniformed leadership objectives. Each division was set up to look out for their own interests and markets. When the restructuring plan that focused on a more centralized management process, many of the things that worked for one division did not necessarily work for other divisions of the company. This left some divisions at a severe disadvantage. Another obstacle that worked against the restructuring was the employee unions in which the company had to deal. The unions were not on board with the various downsizing and restructuring methods. In addition, the company had to deal with a couple of different unions which posed a problem with negotiating tactics. Benefit costs were also a significant investment that did not hold up well under the auspice of restructuring.
Empowerment is an issue that is imperative to the change process. We touched on the idea of empowerment while exploring power, and politics in the workplace. Empowerment is important in regards to The Heart Of
corporate-level strategy you think is most important to the long-term success of the firm and
The company may face structural problems associated with the diversification strategy. As the company gets larger and larger and diversify into different product divisions, the organization structure should be changed to fit the diversification strategy. An inappropriate fit may result in low performance and lead to strategic changes.
Effective leadership is a key enabler as it provides the vision and the rationale for change. Different styles of leadership have been identified, for example coercive, directive, consultative and collaborative. These different styles may each be appropriate depending on the type and scale of change being undertaken. For example, when there is a large-scale organisation-wide change a directive style has been identified as most effective.
5. Is change needed in its long-term direction? its objectives? strategy? its approach to strategy
Restructure the departments based upon the needs of the new organizational structure and the company goals.
3. Is the present structure consistent with current corporate objectives, strategies, policies, and programs, as well as with the firm’s international operations? Yes, all areas are
In the cases analyzed, we might infer that during a period of economic difficulties companies had gone through deep discontinuity. As such, this determined the need for a turnaround to realign the companies’ strategies with the external and internal environment. These changes impacted the four companies analyzed previously.