CORPORATE RESTRUCTURING

Concept of Corporate Restructuring

To survive and compete, present day
organization. should do away with their
existing culture, policies, structure and start
with a clean sheet.
They have to put more emphasis on the
business process as a whole and do everything
to keep the customer.

PROCESS OF RESTRUCTURING
1. CUSTOMER FOCUS:
To succeed in a highly competitive world, every
business will have to listen to the customer, find out
what he needs and deliver more than what he
expects.
2. CORE BUSINESS PROCESS:
The organization must divide itself into strategic
business units. Focusing on an individual core
competency. Then, it should divide the individual SBU
into core business processes by deciding what
product attributes, technologies, designs, skills etc
are most important from the customers point of
view.

Once the key processes are identified it is necessary to
decide which areas need to be restructured and order
in which they should be handled, since restructuring all
the process simultaneously is not possible.
3. STRUCTURAL CHANGES THROUGH
REEINGEERING:
This approach involves radical rethinking and
transformation of key business processes leading to
coordination and flexibility in responding to changes in
the environment.


There are 4 key elements in reengineering

Organization should define distinctive
competencies.
The organization should asses the core processes
that adds value to the distinctive competencies.
The organization should organize work around
processes rather than functions by creating cross-
functional, self managed teams.
It ties up the firms activities closely with suppliers
and customers.
4. CULTURAL CHANGES:
A strategic change often requires changing
the culture of an organization. A culture
change refers to a change in employees
values, norms, attitudes, beliefs and
behaviours

METHODS OF RESTRUCTURING
1. EXTERNAL RESTRUCTURTING:
Asset based restructuring is undertaken
through (i) acquisition/takeovers, mergers,
(ii)asset swaps
(iii)demerger/spin off
Capital restructuring is carried through
(i)leveraged buyouts
(ii)shared buybacks
(iii)Conversion of debt to equity

2. INTERNAL RESTRUCTURING:
This involves portfolio or organizational
restructuring.
Portfolio changes are effected after the SWOT
analysis of the company.
Organizational changes are adopted to ensure
better service to the customers.