Corporate Restructuring as a Competitive Tool for Managers and Stockholders
With the insatiable desire for profits by both the management and the stockholders in the corporate world, comes the need to improve resource optimization and efficiency in order to generate these profits.The managers thus turn to various techniques to steer their organizations into profitability. Efficient operations together with the right economic environment will lead to the needed profits.
Corporate restructuring refers to a process where an organization reorganizes its operations in order to capture the maximum value. In some situations restructuring becomes the only means of survival. The organization thus must identify strategic opportunities and mold itself in a way that best exploits the opportunities. Restructuring has different iterations. It is incumbent upon the management to evaluate the best way to restructure because what works in one industry might be destructive in another. Again the method taken will be dependent on the prevailing economic conditions.
Oneiteration of restructuring is by restructuring the asset base. The organization can decide to reorganize its asset ownership. The organization will thus shed off all the assets that are no longer useful to it or those that eat up into the organization’s profits. Non-performing subsidiaries can also be disposed. Demergers can also help dispose non-performing subsidiaries.
To reduce wedge bill, an organization canreduce its staff and wedges.The organization should asses and evaluates the productivity of its staff. The compensations should be commensurate with the productivity. Redundant positions should be removed.
Increasing market share may require an organization to restructure is marketing through new and enhanced marketing strategies. In order to combat competition the organization should aim to reach new markets. This can also include an audit into the current strategies to find if they work.
An organization can also restructure its operations by embracing the best technology in the market. This can reduce production cost, improve quality and volume. For marketing purposes, it can increase the customer base.
The need to increase asset base may lead to mergers. Mergers allow an organization to have a larger asset base. This will improve the capital of the organization. Acquisitions can help an organization ward-off competition. It can also help in diversification to shield against harsh economic times.
Prevailing economic conditions can also render the current business model non-profitable. An organization can gain competitive advantage by restructuring the business model and venturing into other business areas.
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