Motives behind corporate restructuring

Giving higher equity stakes to managers increases the probability of success of LBOs compared to other takeovers. All these aspects need to be examined with a view to determining their adequacy to cope with change in corporate strategy.

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Both profitable and unprofitable businesses which do not directly contribute to the core company business can be separated. Sometimes cash rich firm with limited growth opportunities may decide to invest their excess cash in cash-strapped firms.

They cannot be managed as subordinates. The contemporary tendency in structure is to make organization as simple, flat, flexible and transparent as possible so that it is most responsive to the organizational needs.

Corporate Restructuring: Nature, Motives and Dimensions

Share prices will rise if investors see the company as viable and growing in the aftermath of restructuring.

These are takeovers financed through debt either by the buyer issuing bonds or by borrowing from a bank. Considerations One part of successful restructuring is convincing investors of the wisdom of the restructuring efforts, and selling them on the idea that this is a positive step for the company.

These include Stock Financed Takeovers: This could be of value in countries where there is insufficient access to sources of finance and therefore creating an internal capital market funding cash starved BUs from large revenue BUs may have a justification. Bruner and MullinsTravlosHuang and Walkling and Yook This is in accordance with theory which suggests that issuance of stock options is perceived by markets as a signal that management believes that the shares are overpriced.

What Are the Motives Behind Corporate Restructuring?

Process restructuring is concerned with appraisal of the effectiveness of the current work process in the changed milieu so as to discern the specific processes that need modifications or radical change. Some companies have a company culture of reinvention.

The entire process is based on wholistic approach. In the past few years though, it is the discounted cash flow method which has gained popularity and acceptance. The top management will have to own responsibility of converting their contractual employees of an economic entity into committed members of the firm.

Corporate restructuring is about revisiting existing management practices of an enterprise and altering them so as to attain greater adaptability and viability with reference to the current and emerging environmental developments.

Where the occurrence of environmental changes is small or incremental, they need to be synchronized with the existing culture. Strategy restructuring is also concerned with assessing adequacy of existing competitive strategies against the background of environmental changes and bringing alteration therein wherever necessary.

Thus, existing structure of a firm needs to be winnowed with reference to types of activities being performed, assignment of these Motives behind corporate restructuring amongst various divisions and departments, assignment of tasks and responsibilities to subordinates and delegation of authority, organizational hierarchies, co-ordination of activities of various divisions and departments as also pattern of communication among those in the structure, the development of informal as well as formal relationships and resulting motivation.

Changes in Political Environment: Further, restructuring exercise is a continuing process which has to be done continuously so as to cope with ever changing environmental developments, exploit emerging opportunities and combat impending threats.

Harvard in-text citation and Referencing used for this paper. Not to mention referring you to my friends at school. Human resource manager has to establish internal structures and processes for enhancing capability of the people to respond to changes.

Companies facing bankruptcy will often reorganize in an attempt to regain their financial footing. Stock prices and credit ratings should rise as a result of restructuring. This is primarily driven by the fact that it is conceptually superior, being as it is based on projected, future operating results rather than on past operating results.

Althea Columburis Student It is very affordable. Motives for Corporate Restructuring: Thus, it covers strategy restructuring, process restructuring, organizational restructuring, manpower restructuring, market restructuring and financial restructuring.

Courts may require companies in bankruptcy to reorganize to pay off creditors and demonstrate their ability to turn a profit. Another salient feature of corporate restructuring is that it is an all permeating process involving an analytical appraisal of the existing strategic policies and practices and wherever necessary redesigning the strategies, the structure of the organization, up-gradation of its technology, modernization of its plant and equipment, revamping financial structure, remodeling its human relations ethos, revamping its marketing philosophy and repositioning the firm within the corporate world."Motives Behind Corporate Restructuring" Essays and Research Papers Motives Behind Corporate Restructuring Categories of corporate restructuring Corporate Restructuring entails a range of activities including financial restructuring and organization restructuring.

Discuss about the motives behind corporate restructuring, evaluate the methods by which mergers and takeovers may take place. Read this article to learn about Corporate Restructuring.

After reading this article you will learn about: 1. Nature of Corporate Restructuring 2. Motives for Corporate Restructuring 3. Dimensions. Corporate restructuring is about revisiting existing management practices of an enterprise and. Goals of Restructuring. The ultimate objective of restructuring is to improve the company's financial picture.

Stock prices and credit ratings should rise as a result of restructuring. In restructuring, businesses often grow leaner, cutting the work force and shedding less-profitable divisions or product lines. Motives behind corporate restructuring 1. Motives behind expansion 2. Motives behind corporate control 3.

Motives behind contraction 4. Motives behind change in ownership structure 5. Motives behind expansion 1. Growth 2. Technology 3. Product advantage and product differentiation 4.

Government policy 5. Differential labour cost, productivity, etc. ´╗┐What Are the Motives Behind Corporate Restructuring Like a person turning over a new leaf and making a fresh start, corporations try to gain a second wind by restructuring.

Whether the restructuring takes the form of splitting up a company, merging it with another company, reorganizing, or even taking on a new name, the goal is to end up with a .

Motives behind corporate restructuring
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