To What Extent Does Restructuring Transform Corporate Market and Financial Performance?

2139 Words May 5th, 2013 9 Pages
To what extent does restructuring transform corporate market and financial performance? Discuss using an extended example.
Restructuring is simply the reorganisation of a company’s structure to combat external or internal forces that hinder the maximisation of shareholder value. The term restructuring is quite broad an is an umbrella term for any action taken by a firm to maximise shareholders wealth (Wright et al) or a company’s reaction when it’s under pressure (Usui and Colignon, 1996). These actions “bracket mergers and acquisitions with much else” (Froud et al., 2002, P.2). This essay should explain in great detail how restructuring can transform corporate market and financial performance. It will focus on financial, portfolio and
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The government sometimes has to step in to minimise the formation of monopolies. British Airways were hopeful for a merger with American Airlines which would have made them a dominant airline in major airports across the world. The deal was eventually stopped because of its anti competitive nature. In addition to monopolies, a popular critique on mergers and acquisitions is they just don't work. “...the Boston consultancy group estimate that 64% of recent US acquisitions actually destroy value for the acquirers shareholders” (Kotler et al 2004) “rather than increased profitability, mergers and acquisitions have come to be associated with lowered morale, job dissatisfaction, unproductive behaviour...” (Meeks 1977, Sinetar 1981, Attendorf 1986, Cartwright & Cooper 1993). Three major reasons for the failure of mergers and acquisitions are a clash of organisational culture, human relations dilemmas and abandoning core competencies. Different organisations have unique styles of going about their day to day operations. When a company merges with or acquires another the dominant culture usually prevails however employees from the organisation with the less dominant culture might still carry on doing things the way they've always done it thus causing this clash.
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