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CORPORATE

RESTRUCTURING
INTRODUCTION
REASONS FOR CORPORATE RESTRUCTURING
OBJECTIVES OF AN ORGANIZATION
COMPONENTS OF RESTRUCTURING
BARRIERS TO RESTRUCTURING
TYPES OF CORPORATE RESTRUCTURING
STRATEGIC OPTIONS IN CORPORATE RESTRUCTURING
CASE STUDY



INTRODUCTION
Combination of two words Corporate
meaning a large company or group and
Restructuring meaning rearrangement
Corporate restructuring is the process of
redesigning one or more aspects of a
company
It is a necessity when the company has
grown to the point that the original
structure can no longer efficiently
manage the output and general interests
of the company

REASONS FOR CORPORATE
RESTRUCTURING
Change in fiscal & government policies
Core competencies
Information technology revolution
Concept of customer delight
Cost Reduction

OBJECTIVE OF AN ORGANIZATION
Wealth
Maximization
Internal Growth
[Product & Capital
Extension]
External Growth
[Mergers and
Acquisitions]
COMPONENTS OF RESTRUCTURING
Renegotiation of labor contracts to reduce overhead
Re-financing of corporate debt to reduce interest payments
Major public relations campaign to reposition the company
with consumers
Forfeiture of all or part of the ownership share by pre-
restructuring stock holders
Sale of underutilized assets, such as patents or brands
Outsourcing of operations such as payroll and technical
support to a more efficient third party


BARRIERS TO RESTRUCTURING
Inadequate commitment from the Top
management
Resistance to change
Poor communication
Absence of requisite skills
Failure to understand the benefits of
restructuring
Availability of resources
Organizational Workload
Non adherence to time schedule
Lack of clear and visible leadership

TYPES OF CORPORATE RESTRUCTURING
Organizational Restructuring
Portfolio Restructuring
Financial Restructuring

ORGANIZATIONAL RESTRUCTURING
Restructuring strategy is designed to
increase the efficiency and
effectiveness of personnel, through
significant changes in the organizational
structure
Includes response changes in the
business and related environments.
Takes the form of divestiture and
acquisitions.

PORTFOLIO RESTRUCTURING
Involves divesting or acquiring a line of business perceived
peripheral to the long term business strategy of the company
Represents the companys attempt to respond to the
marketing needs without losing sight of its core competencies
Result of some strategic alliance
Responds to shareholders desire to downsize and refocus the
companys operations
Responds to outside boards suggestion to restructure
Responds to strategies adopted as a response to exercising
call or put options

FINANCIAL RESTRUCTURING
It Involves change in the capital structure and capital
mix of the company to minimize its cost of capital
It involves infusion of financial resources to facilitate
mergers, acquisitions, joint venture, strategic alliances
and stock buy-back
Depends on availability of free
cash flows, takeover threats
faced by the company and
concentration of equity
ownership

PURPOSE OF FINANCIAL RESTRUCTURING
Generate cash for exploiting
available investment
opportunities
Ensure effective use of
available financial resources
Change the existing financial
structure, in order to reduce
the cost of capital
Leveraging the firm
Preventing attempts of
hostile takeover

STRATEGIC OPTIONS IN CORPORATE
RESTRUCTURING
Process of eliminating existing inefficiencies

Aims:
Improving operations
Alter the relative strength of the organization to face
competition
Facilitate creating of competitive advantage
Provide better customer satisfaction
Generate profits in a free market economy
Help the organization differentiate itself from competitors
Ensure it delivers value to the customers

STRATEGIC OPTIONS
Cost Leadership
Options
Capacity Expansions
Takeovers
Mergers
SWOT Options
Diversification
Globalization
Splits
STRATEGIC OPTIONS
Product
Excellence
Options
Strategic Alliances
Collaborations
Joint Ventures
Assets
Reorganization
Acquisitions
Sell-offs
CASE STUDY
Organization : Dell Inc.
Industry : IT Hardware

ABSTRACT
The case examines the corporate restructuring program at
Dell Inc. (Dell), the US based leading technology company
Founded in 1984, Dell went on to become the largest seller of
PCs and servers in the 1990s. However, with rising
competition by early 2000s, Dell's market share started falling
and its profitability was affected.
To counter the competition and in an effort to arrest the
declining market share and profitability, Dell started a major
corporate restructuring program.
CASE STUDY
ISSUES FOR THE COMPANY
Understand the changing dynamics of the global PC industry.
Examine the growth strategies of Dell over the years.
Evaluate the efficacy of the measures adopted by Michael Dell
to improve the financial performance of the company during
his second term as the CEO of Dell.
Analyze the impact of global financial crisis on Dell.
Examine the future strategy of Dell.
CASE STUDY
The restructuring program was implemented under the
leadership of Michael Dell (Michael), the founder, Chief
Executive Officer (CEO) and Chairman of the company.
He initiated several changes including more focus on product
design, selling PCs through retail stores, acquiring software,
storage and technology service companies and implementing
significant cost-cutting exercise.
However, when the restructuring efforts were still underway,
the global financial crisis of 2008-09 affected Dell's financial
performance adversely.
CASE STUDY
In January 2009, Dell started another major reorganization
program in which its global business was restructured around
four customer groups Large Enterprise, Public Sector, SMB,
and Consumer instead of the earlier geographical divisions.
The company also initiated changes at the top management
level.
The case ends with examining some strategic measures taken
by Dell to regain its market leadership position.
Thank You.