Restructuring Strategy

De Leon, Alwin
Doronio, Christian Mark
Estavillo, Lerma
 Business Restructuring
Involves radically changing a
company's organizational, financial
and operating structure
Addresses serious financial and
operational issues that could lead to
a corporation's shutdown or
liquidation.
 Business Restructuring
conducted for the primary purpose of
returning a corporation to
profitability and productivity.
Or, the restructure is often viewed as
a sign that the company is financially
stable and has set goals for future
growth and expansion.
 Reasons for Organizational
Restructuring:
Changing nature of business
New methods of working
Proper technology
Buy outs
 Basic principles of Business
Restructuring:
Align the organizational structure
Cut down on the complexity
Focus on having better activity
Creating roles that are feasible
Balance your work properly and load
of managers
Kinds of Business Restructuring Strategy

Financial Restructuring
Organizational Restructuring
Portfolio Restructuring
Financial Restructuring
is the reorganization of the financial
assets and liabilities of a corporation.
undertaken as a means of
eliminating waste from the costs of
operations of the company.
Types of Financial Restructuring

1. Debt Swap
-Change in the company's capital
structure
-Replacing debt with equity
2. Debt Loading
-loads the balance sheet with debt
to finance the buyout of existing
shareholders.
Organizational Restructuring

redesigning operations and

management reporting structures
correct the operational issues
changes to the organizational setup
positioning the company to be more
competitive
poising the corporation to move in an
entirely new direction.
 Types of Organizational
Restructuring
1. Downsizing
- layoff, rightsizing or smart sizing
- reducing the manpower to keep
employee costs under control
2. Starburst
- involves breaking a company into
smaller independent business units for
increased flexibility and productivity
 Types of Organizational
Restructuring
3. De-layering
- breaking down the classical pyramid
setup into a flat organization.
4. Business Process Re-engineering
- carried out for making operational
improvements.
- re-engineering usually results in
changing roles.
Types of Organizational
Restructuring
5. Outsourcing
- outsource some of their processes to
other firms.
Benefits:
It helps in reducing costs
Allows the business to concentrate
on its core business and leave the
remaining tasks to outsourcing firms.
 Types of Organizational
Restructuring
6. Virtualization
- pushing employees outside the office
to places where they are more needed
like at the clients site.
III. Portfolio Restructuring

sell or shut down unprofitable,

money-losing divisions and
subsidiaries or those that no longer
fit its strategy.
 Need For Organization
Restructuring
New skills and capabilities are
needed to meet current or expected
operational requirements.
Accountability for results are not
clearly communicated and
measurable resulting in subjective
and biased performance appraisals.
Parts of the organization are
significantly over or under staffed.
 Need For Organization
Restructuring
Organizational communications are
inconsistent, fragmented, and
inefficient.
Technology and/or innovation are
creating changes in workflow and
production processes.
Significant staffing increases or
decreases are contemplated.
 Need For Organization
Restructuring
Personnel retention and turnover is a
significant problem.
Workforce productivity is stagnant or
deteriorating.
Morale is deteriorating.
 Important Methods of
Restructuring
Joint ventures
Sell off and spin off
Divestitures
Equity carve out
Leveraged buy outs (LBO)
Management buy outs
Joint Ventures
new enterprises owned by two or
more participants
typically formed for special purposes
for a limited duration
Each of the venture partners
continues to exist as a separate firm,
and the joint venture represents a
new business enterprise
Spin-off
getting rid of underperforming or
non-core business divisions that can
drag down profits.

Divestitures
which a firm sells a portion of its
assets or a division to another
company.
Leveraged Buyout
- transaction in which a person, group
of people, or organization buys a
company or a controlling share in the
stock of a company.
Management buyout
- management of the company buys
the company