To What Extent Does a Mature and Cyclical Product Market Drive Corporate Restructuring? Use an Example to Discuss Whether Restructuring Transforms Market and Financial Performance.

1669 Words Mar 28th, 2013 7 Pages
To what extent does a mature and cyclical product market drive corporate restructuring? Use an example to discuss whether restructuring transforms market and financial performance.

A business, which has a product that runs in a cyclical and mature market, will eventually not have the ability to ‘grow’ anymore as it will reached the ‘top’. Therefore to continue making its business profitable, increase shareholder value and work more effectively they under go corporate restructuring.
This is a process used in all sorts of firms, from small to big, and has many kinds of corporate activities, based on the transfer of assets.
In this essay, I will discuss the impact of corporate restructuring in a mature and cyclical product on its market
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Then it becomes vulnerable as it affects the moral conditions of the workers, due to change, therefore decreases the financial performance. It acts on it instantly.

GSK, is a pharmaceutical and consumer healthcare company formed in 2000, originally named Glaxo. Glaxo was the “ most successful European company of the 1980s “ (Kay, 1993: 30). It then acquired Wellcome followed by the merger of Beecham plc, and SmithKlineBeckman Corporation, which lead to GlaxoSmithKline. It has produced many remedies against cancer, viruses or even diabetes.
Its market is of cyclical nature, so when a patent becomes invalid, the drug (asset), looses its significance, then the“ revenue will fall away precipitously (…), will enter the mature phase and soon the decline. This is when generic becomes available”. (Froud Johal Leaver, 2006: 178) A generic is a” patent-expired substitute “. ( Froud Johal Leaver Williams, 2006 : 153 ).
Patents, for pharmaceutical companies such as GSK, are major as they secure the high sales, till it matures. Therefore, “ the pharma industry offers high visibility and predictability of future revenue “. (Froud Johal Leaver Williams, 2006 : 150)
This was the case with Glaxo, and as a result to go against this cycle, they went through restructuring using M&A.

Glaxo had produced an anti-ulcer drug, ‘Zantac’ , the companies

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