The paper “ Need for Restructuring in an Organization, Forms of Restructure, Errors to Avoid When Restructuring” is an actual variant of the literature review on management. In an organizational context, restructuring is the introduction of changes to the business strategies of an organization, which results in diversification, and closing parts of the business among other activities. This is often done with the objective of improving the long-term productivity of the business operations of an organization (Hotchkiss and Mooradian 1997). Through restructuring, companies have the ability to cut out or merging departments with the objective of rearranging the business in ways that improve their profitability and efficiency (Balogun and Johnson 2004).
This is an indication that through restructuring businesses have the ability to consolidate their business operations and strengthening their position in ways that help in the realization of organizational objectives and the establishment of an effective competitive advantage in the business environment (Owolabi & Dada 2011). This essay will critically explain the three forms of restructuring. In addition, the essay will explain the errors companies should avoid when restructuring. Defining corporate restructuringRestructuring involves changes in business mix, asset mix, alliances, ownership, and business mix as techniques of enhancing shareholder value.
This is an indication that there are three ways through which rest curing can be realized (Hotchkiss 1995). Ownership restructuring, for instance, can be raised through mergers and acquisitions, joint ventures, strategic alliances, and leveraged buyouts. Business restructuring involves the decision by an organization to be involved in the rearrangement of its business divisions through diversification into new businesses, brand acquisition, divestment, and outsourcing (Balogun and Johnson 2004). Asset restructuring involves sale and leaseback of assets, receivable factoring, or securitization of debt.
For an organization to make an effective decision on the restructuring approach to consider it is important to be engaged in a continuous assessment of its business portfolio, ownership and assets arrangement, and capital mix to ensure that it finds the most effective opportunities of maximizing shareholder value (Owolabi & Dada 2011).
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